Data Facts Blog


Strategies to Help You Erase Debt in 2014

Posted in Uncategorized by datafactssolutions on March 28, 2014

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If you are like most you started the year off with a list of “Resolutions”.  You probably started the year by saying to yourself “This will be the year I finally erase all my debt.”  But now that spring is already here, how have you done with sticking with your financial resolutions?  With almost 88% of all New Year’s Resolutions failing, sticking to your budget may be harder than you think.  The reason?  Our brain is wired to do the same thing year in, and year out, therefore making it very hard to actually change the behaviors that got you into debt. 

Here are some Tips to help you understand your debt behaviors, as well as tools to help you combat the temptations of spending.

We all tend to overestimate our own willpower and self-control when we set resolutions.  We REALLY believe that for whatever reason THIS YEAR will be the year “I stick to it”.  Planning to be virtuous is easy and it feels achievable. Actually avoiding temptations is much more difficult.

  • Be realistic with your reaction to temptations.
  • Give yourself room to re-adjust the budget if the original plan isnt feasable.

 

Our brains discount future consequences for ourselves when we want instant gratification. How many times have you eaten a calorie laden meal right before you started your big diet?  That is because our brain is saying “go ahead, eat the cake…those calories are for that person starting a diet tomorrow”, it almost makes  you feel like that is a different person, therefore not recognizing the consequences for yourself right then and there.

  • Take the decision-making out of your own hands.
  • Set up your paycheck so a portion automatically goes into savings without you ever seeing it and being tempted to spend it instead of save it.
  • Keep credit cards at home—this completely eliminates those impulse buys

 

Credit card spending doesn’t feel as “REAL” as spending cash. When we pay with cash, we feel the pain of losing the money immediately, but paying with a credit card delays the sense of pain until the bill comes. And because we pay our credit card bills electronically, there is a further sense of unreality to the amount of money you owe. The further you get away from cash transactions, whether that is in the initial point of purchase or in the bill paying, the less likely you are to feel the pain and urgency of your debt.

  • Start paying with cash instead of credit
  • Disperse your monthly “allowance” into envelopes of cash.  As long as you have money in the “shoe envelope” you can buy shoes.  If it’s empty, you got to wait until next month—even if they are on sale! 

These strategies will help you change your behavior habits, by giving yourself  time to actually think about your spending habits.  By understanding WHY you spend, you can begin to develop the discipline necessary to pay off your debt.

 

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8 Ways to Build a GREAT Credit Score

Posted in Uncategorized by datafactssolutions on February 6, 2014
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Establishing a good credit history has never been as important as it is today. It’s not just that you’ll need good credit to get decent rates when you’re ready to buy a home or a car. Your credit history can determine whether you get a good job, a decent apartment or reasonable rates on insurance. One seemingly minor misstep — a late payment, maxing out your credit cards, applying for too much credit at once — can haunt you for years. If you’re just starting out, you have a once-in-a-lifetime opportunity to build a credit history the right way. Here’s what to do, and what to avoid.

 

Check your credit report

You’ll first want to see what, if anything, lenders are saying about you. That kind of information is contained in your credit report at each of the three major bureaus: Equifax, Experian and Trans Union. Credit reports are used to create your credit score, the three-digit number lenders typically use to gauge your creditworthiness. Lenders also may look at the report itself, as may the landlords, employers and insurance companies who use credit to evaluate applicants.

 

Establish checking and savings accounts

Lenders see these accounts as signs of stability. Opening checking and savings account is also one of the few things you can do as a minor to start building a financial history. While you can’t get a credit card in your own name until you’re 18 and can be legally held to a contract, many banks have no problem letting you open an account. Many, but not all. If your bank balks, you need to either look around for another bank or consider opening a joint account with an adult.

 

Understand the basics of credit scoring

You need to know that the two most important factors in your score are:

  • Whether you pay your bills on time.
  • How much of your available credit you actually use.

It’s essential that you pay all your bills on time, all the time. Set up automatic payments or reminder systems so that you’re never, ever late. All it takes is a single missed payment to trash your credit score — and it can take seven years for the effects to completely disappear. You also don’t want to max out any of your credit cards, or even get close. Keeping your credit use to less than 30% of your credit limits will help you get the best possible credit score. Finally, you don’t need to carry a balance on a credit card to have a good credit score. Paying your bill off in full is the best way to keep your finances in shape and build your credit at the same time.

 

 

Apply for credit while you’re a college student

It turns out that there’s no easier time to get a card than while you’re a college student, but you must proceed with caution.  Look for a card with a low or nonexistent annual fee and low interest rates. For now, just get one: Opening a slew of credit accounts in a short period of time can make you look like a risky customer.

 

 

Apply for a secured credit card

If you can’t get a regular credit card, apply for the secured version. These require you to deposit money with a lender; your credit limit is usually equal to the deposit. You’ll want to screen your card issuer carefully. Some charge outrageous application or annual fees and punitively high interest rates. Your credit union, if you have one, is a good place to start looking for a secured card.

Ideally, the card you pick would:

  • Have no application fee and a low annual fee
  • Convert to a regular, unsecured credit card after 12 to 18 months of on-time payments
  • Be reported to all three credit bureaus – If it doesn’t, the card won’t help build your credit history.

 

Get a finance company card

Gas companies and department stores that issue charge cards typically use finance companies, rather than major banks, to handle the transactions. These cards don’t do as much for your credit score as a bank card (Visa, MasterCard, Discover, etc.), but they’re usually easier to get.

 

Get an installment loan

To get the best credit score, you need a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages). Once you’ve had and used plastic responsibly for a year or so, consider applying for a small installment loan from your credit union or bank. Keeping the duration short — no more than a year or two — will help you build credit while limiting the amount of interest you pay.

  

 

Use revolving accounts lightly but regularly

For a credit score to be generated, you have to have had credit for at least six months, with at least one of your accounts updated in the past six months. Using your cards regularly should ensure that your report is updated regularly. It also will keep the lender interested in you as a customer. If you get a credit card and never use it, the issuer could cancel the account.

 

Just remember the credit tips mentioned earlier:

  • Don’t charge more than 30% of the card’s limit.
  • Don’t charge more than you can pay off in a month. As mentioned earlier, you don’t have to pay interest on a credit card to get a good credit score, and it’s a smart financial habit to pay off your credit cards in full each month.
  • Make sure you pay the bill, and all your other bills, on time.

A HReal HRisk HR can help HReduce | BCP Business Center

By Lesley Fair

Data Privacy DayToday is Data Privacy Day. You’ve educated your staff about limiting access to sensitive information, locking up confidential paperwork, and securing the network. But Latanya Sweeney, the FTC’s new Chief Technologist, just clued us in about a potential security vulnerability you, your HR team, and your web master can do something right now to correct.

It can happen on any site, but it’s common for universities, research institutions, non-profit organizations, and even tech companies to include links to the CVs of professors, scientists, executives, and other staff. For the most part, those resumes list scholarly publications and academic interests. But scroll through all that high-minded content and you may get to the down-and-dirty stuff identity thieves live for: dates of birth, home addresses, and even Social Security numbers.

On this topic – and a whole lot of others – when Latanya Sweeney talks, we listen. And here’s why. Yes, Latanya is an Ivy League Big Brain Academic. (And we mean that in the nice way, of course.) But she also has the tech credentials to speak geek with the very best of ‘em. And if that weren’t enough, for years she’s been a leading thinker about how privacy and technology policy affects consumers.

Here are some steps you can take immediately to help plug the potential gap Latanya is warning about:

HR professionals: Survey the faculty or management pages of your site and have your web master take down any CVs or resumes that include the kind of personal information ID thieves could exploit. Explain to your colleagues why it’s a risk they shouldn’t be taking. As new staff members are hired, implement a policy not to upload documents that include sensitive data. Executives and staff will appreciate that you’re looking out for them – and for the reputation of your institution or business.

Academics and professionals: If the CV or resume posted on your employer’s site or your personal homepage includes your Social Security number, date of birth, or other personal information, take the page down. If it’s a link to a .pdf, revise the document to get rid of the data crooks could exploit. Pass the word to your colleagues, mention it in your next staff meeting, or print this page and post it where they’ll see it.

Job applicants, graduate students, and others with an interest in promoting their credentials online: Be savvy about what you include on your CV, resume, or webpage. There’s just no reason for posting your Social Security number or date of birth where it’s accessible to some random web surfer. And your home address? These days, isn’t it more likely legitimate employers would contact you via email?

Those steps can reduce your risk from here on in, but what can you do if your personal information is already out there? Go to annualcreditreport.com and exercise your right to one free copy of your credit report from each of the three major national credit reporting companies. Stagger your requests and monitor your report once every four months.

A HReal HRisk HR can help HReduce | BCP Business Center.

CFPB—What The New Rules Mean For Consumers

Posted in Uncategorized by datafactssolutions on January 17, 2014

The new CFPB New Mortgage Rules recently took effect on January 10th 2014.

You’ve probably heard several things about how this is effecting banking and lending institutions, but you may still not be sure what this means to the consumer.

First let’s take a brief look back in the not so distant past…In 2008, the rise in home foreclosures was viewed by many as the result of sub-standard mortgage lending practices. Subsequently, Congress passed the Dodd-Frank Act in 2010, which created the CFPB and set forth a number of financial industry regulations aimed at protecting consumers, including some pertaining to mortgage lending. In January 2013, the CFPB issued mortgage rules that implement the mortgage provisions set forth by Congress under the act.

The new rules which took effect on January 10th broaden coverage of existing ability-to-repay rules, which require a lender to make a reasonable, good faith determination that a consumer has the ability to repay a loan. The rules extend coverage of the ability-to-repay rules to the majority of closed-end transactions secured by a dwelling (with certain exceptions). In addition, the rules set forth specific procedures a lender must follow when determining a borrower’s ability to repay a loan, including the consideration and verification of certain consumer information (e.g., income, employment status) and the calculation of the borrower’s monthly mortgage payment.

The rules also center on what are referred to as Qualified Mortgages. According to the Dodd-Frank Act, lenders that issue Qualified Mortgages will receive a presumption of compliance with ability-to-repay rules, thereby reducing their risk of challenge from a borrower for failing to satisfy ability-to-repay requirements.

The rules specify various requirements that a loan must meet in order for it to be considered a Qualified Mortgage, including:

  • Limits on risky loan features (e.g., negative amortization or interest-only loans)
  • Cap on a lender’s points and fees (3% of the loan amount)
  • Certain underwriting requirements (e.g., 43% monthly debt-to-income ratio loan limit)
  • The new mortgage rules were mainly put into place as a way to end irresponsible mortgage lending and ensure that borrowers will only be able to obtain a mortgage loan that they can afford to pay back.

Proponents view the rules as welcome industry safeguards that simply mirror responsible mortgage lending practices that are already in place. However, some mortgage-industry experts fear that the new rules may end up making obtaining a mortgage loan more difficult than it has been in the past–especially for borrowers who have a high debt-to-income ratio. Borrowers may also find themselves burdened with the task of providing lenders with additional documentation that they may not have had to in the past.

But what does all this mean to you?  The new mortgage rules mean you will have more information and more protection when you’re shopping for a loan, and while you own your home.

In the run-up to the housing crisis, some lenders made loans without checking a borrower’s income, assets, or debts. That turned out to be a pretty bad idea. And, when many borrowers couldn’t repay their loans, the economy took a devastating hit.

The CFPB new mortgage rules help protect consumers by requiring lenders to make a “good-faith, reasonable effort” to determine that you are likely to be able to repay your loan.   That means the lender will check and verify your income, assets, debts, credit history, and other important financial information. And no more qualifying consumers based only on those initial “teaser” rates that trapped many new homebuyers.

More Protections

Lenders who meet certain requirements called Qualified Mortgages–or QMs– are presumed to have made that good-faith, reasonable effort to check the applicant’s ability to repay. QMs have several characteristics that protect consumers.

First, QMs can’t have risky features like negative amortization or no-interest periods. Second, QMs are available with some exceptions to borrowers who have a monthly debt-to-income ratio of 43 percent or less, meaning that the total of their monthly mortgage payment, plus other fixed debts like car loans, is not more than 43 percent of their monthly gross income.

Most people taking out a mortgage now have a debt-to-income ratio of around 38%

Consumers will also have less to worry about when hiring someone to find a mortgage.  Loan officers and mortgage brokers have to follow rules to protect consumers from certain conflicts of interest.  That means anyone you pay to help you find a mortgage generally can’t also be paid by someone else.  And the loan officer or mortgage broker can’t get paid more to put you into a loan that has a higher interest rate.

More Information

The new rules empower all consumers to get important more information about their mortgage.  Consumers will now get a new periodic mortgage statement or coupon book that gives important information about monthly payments.  If you have questions about your mortgage or you believe your servicer has made a mistake, the servicer is required to respond to your inquiries quickly.

If your financial situation changes and you are having trouble making your mortgage payments, servicers now have to reach-out under certain circumstances and send written information describing how you can apply for the options available to avoid foreclosure.  During the housing crisis, mortgage servicers were often ill-prepared to help borrowers in trouble.  Important paperwork was often lost and borrowers were frustrated by services who couldn’t give them accurate information about their options for avoiding foreclosure.  Now your servicer has to ensure that employees assigned to help you will be able to answer your questions and important documentation won’t go missing.

You can think of all these changes as a “back to basics” moment for the mortgage market:  no debt traps, surprises, or runarounds.  And a market where if you run into trouble paying your mortgage, you will have a fair shot at all the options available to help you avoid foreclosure.

 

 

Protecting Your Credit After a Security Breach

Posted in Uncategorized by datafactssolutions on December 19, 2013

HACKED

In light of the recent announcement from TARGET that in-store shoppers between November 27th and December 15th could have been victim to unauthorized access on their credit and debit cards, now is an appropriate time to revisit what consumers need to do after a credit breach.

The TARGET incident involved unauthorized access to consumers name, credit and/or debit number, the card’s expiration date, and the CVV (the 3 digit security code).  This is quite a bit of information, that can easily lead to identity thieves duplicating a consumers credit/and or debit card, and start to rack up unauthorized charges.

Below are steps and recommendations that may help to protect you from potential misuse of your credit and debit information.  You should remain vigilant for incidents of fraud and identity theft by regularly reviewing your account statements and monitoring free credit reports.

Step 1.  Contact your credit/debit card holders of a potential breach

Step 2.  Obtain a copy of your credit report to review for any suspicious activity.  If you discover any suspicious or unusual activity on your accounts or suspect fraud, be sure to report it immediately to your financial institutions

You may also periodically obtain credit reports from each nationwide credit reporting agency.  If you discover information on your credit report arising from a fraudulent transaction, you should request that the credit reporting agency delete that information from your credit report file.  In addition, under federal law, you are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting agencies.  You may obtain a free copy of your credit report by going to www.AnnualCreditReport.com or by calling (877) 322-8228.  You may contact the nationwide credit reporting agencies at:

Equifax

(800) 525-6285

P.O. Box 740241

Atlanta, GA 30374-0241

www.equifax.com

 

Experian

(888) 397-3742

P.O. Box 9532

Allen, TX 75013

www.experian.com

Transunion (Fraud Victim Assistance Division)

(800) 680-7289

P.O. Box 6790

Fullerton, CA 92834-6790

www.transunion.com

Step 3.  Add a fraud alert to your credit report file to help protect your credit information.  A fraud alert can make it more difficult for someone to get credit in your name because it tells creditors to follow certain procedures to protect you, but it also may delay your ability to obtain credit.  You may place a fraud alert in your file by calling just one of the three nationwide credit reporting agencies listed above.  As soon as that agency processes your fraud alert, it will notify the other two agencies, which then must also place fraud alerts in your file.

Step 4.  Place a Security Freeze on your credit report.  This will prohibit a credit reporting agency from releasing information from your credit report without your prior written authorization.

If you have been a victim of identity theft and you provide the credit reporting agency with a valid police report, it cannot charge you to place, lift or remove a security freeze.  In all other cases, a credit reporting agency may charge you up to $5.00 each to place, temporarily lift, or permanently remove a security freeze.  To place a security freeze on your credit report, you must send a written request to each of the three major consumer reporting agencies listed above.

In order to request a security freeze, you will need to provide the following information:

  1. Your full name (including middle initial as well as Jr., Sr., II, III, etc.);
  2. Social Security number;
  3. Date of birth;
  4. If you have moved in the past five (5) years, the addresses where you have lived over the prior five years;
  5. Proof of current address (e.g., a current utility bill or telephone bill);
  6. A legible photocopy of a government issued identification card (e.g., state driver’s license or ID card or military      identification);
  7. If you are a victim of identity theft, a copy of either the police report, investigative report, or complaint to a law enforcement agency concerning identity theft;
  8. If you are not a victim of identity theft, payment by check, money order, or credit card (Visa, MasterCard, American Express or Discover only).  Do not send cash through the mail.

The credit reporting agencies have three (3) business days after receiving your request to place a security freeze on your credit report.  The credit reporting agencies must also send written confirmation to you within five (5) business days and provide you with a unique personal identification number (PIN) or password, or both that can be used by you to authorize the removal or lifting of the security freeze.

To lift the security freeze in order to allow a specific entity or individual access to your credit report, you must call or send a written request to the credit reporting agencies by mail and include proper identification (name, address, and Social Security number) and the PIN number or password provided to you when you placed the security freeze, as well as the identities of those entities or individuals you would like to receive your credit report or the specific period of time you want the credit report available.  The credit reporting agencies have three (3) business days after receiving your request to lift the security freeze for those identified entities or for the specified period of time

To remove the security freeze, you must send a written request to each of the three credit reporting agencies by mail and include proper identification (name, address, and Social Security number) and the PIN number or password provided to you when you placed the security freeze.  The credit reporting agencies have three (3) business days after receiving your request to remove the security freeze.

Identity theft is the fastest growing white collar crime.  The best defense against it is Knowledge.  Educate yourself on protective practices to help ensure your credit and identity is kept safe and secure.

Back On Track: The Housing Market Is Changing For The Better

Home ownership in the palm of your handsThe housing market is improving much faster than anyone would have expected a year ago. Nationally, the prices of homes increased by 10% since February of 2012. However, many in the industry think that this may be cause for concern. They are nervous that the fast pace of recovery will cause another bubble.

Housing prices have remained positive throughout the seasonally slow winter months. “Home prices ended the first quarter of 2013 in a similar fashion to how they started the year, stable and in positive territory,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “It has been seven years since home price growth continued throughout winter. This is very strong evidence of the start to a new leg of the recovery, one that should give further confidence to consumers and lenders alike that the recovery is real. As buyers become more confident the recovery is sustainable, this sentiment should grow to create a positive feedback loop.” It even appears that prices will still go higher. Here are a few reasons this may be the case:

  • The inventory of homes available for sale has fallen to the lowest amount in 20 years.
  • Since 2008, Homebuilders are not adding as many newly constructed homes to the market. Rising costs of building materials and labor are causing builder confidence to be low. “Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said Rick Judson, NAHB chairman and a home builder from Charlotte, N.C. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”
  • Banks are selling fewer foreclosures. “Although the overall national foreclosure trend continues to head lower, late-blooming foreclosures are bolting higher in some local markets where aggressive foreclosure prevention efforts in previous years are wearing off,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile, more recent foreclosure prevention efforts in other states have drastically increased the average time to foreclose, which could result in a similar outbreak of delayed foreclosures down the road in those states.”
  • Investors have purchased many available homes, converting them to rental properties.
  • Borrowers aren’t willing or able to sell at such low prices.
  • Tighter Lending standards mean that sellers are afraid they will not qualify for a new loan.
  • Demand has increased dramatically due to first-time homebuyers. Rising rents and falling interest rates make monthly payments less than what it costs to rent. Also, the demand is currently higher than the available supply.
    Low interest rates allowing qualified buyers to borrow more money. Today’s historically low interest rates have given American homeowners a significant boost to their purchasing power. In the pre-bubble period from 1985 through 1999, when rates for a 30-year fixed mortgage ranged between six percent and 13 percent, Americans spent 19.9 percent of their median monthly incomes, on average, on mortgage payments for a typical, median-priced home, according to Zillow. At the end of the fourth quarter of 2012, with mortgage rates in the 3 to 4 percent range, U.S. homeowners paid 12.6 percent of their monthly income on mortgage payments, down 36.9 percent from historic, pre-bubble norms, according to Zillow.

Prices may be rising quickly but tight credit standards are keeping everything in check. The housing market is healing but could potentially be in for more instability until more people purchase homes in which they want to live.

~~Stacie Shelton is a member of the Marketing Team at Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

Spending Mistakes Smart People Make Over the Holidays

empty-pocketDecember is a time for families and friends to come together over the holidays. However, the last month of the year can also be a big budget buster that can leave you broke and in debt if you aren’t careful.

We have created a breakdown of mistakes smart people make over the holidays that result in January being hard to bear.  Avoiding these actions can help you make certain you roll into January with some money left in your pocket and your credit score intact.

The “I’ll pay it off next month” blunder.  Perhaps the best thing you can do for yourself is to set a budget for the holidays, and pay for those plans with cash. Using a credit card for holiday purchases sets you up to overspend. Paying for gifts you bought in December all the way through April is nobody’s idea of fun. Not to mention the negative affect those credit card charges could have on your credit score.

The “I’ll know it when I see it” shopping plan. Scour sales papers BEFORE your shopping trip to get an idea of the items you will be buying, and the cost. Shopping without a plan is like going into the grocery store hungry; it sets you up to overspend on impulse items.

The “it’s a bargain” trap. Don’t fall for the deep discount prices and one-day only ads. These ploys can break your budget and rack up lots of credit card charges. If the item wasn’t on your list and included in your budget, don’t buy it.

The “open a credit card today” ambush. Sure, an extra 10 or 15% off for simply opening a store credit card sounds great. However, don’t be taken in by this offer. A new credit card will show up as an inquiry on your credit report, and will give you the urge to use it lavishly. Just say no.

Now, those are goofs that deal with shopping. However, other activities can be budget breakers during the holiday season.

The “this dress makes me look skinny” argument. While we all like a new outfit, do you really need that new dress, new purse, or new cufflinks for your holiday party? Do you really not already own an outfit you can wear? Make sure you don’t overspend on clothing for the holidays that will end up only being worn once.

The “eat, drink, and be merry” boo-boo. Holidays inspire quality time with friends and family. However, expensive meals and overindulging in alcohol can tank your budget. Plan ahead for nights out, and suggest less expensive venues if your budget is tight.

Being aware of these holiday budget saboteurs is the first step to success. By avoiding these mistakes, you can keep your bank account and credit score high! Don’t let money mistakes over the holidays turn HO HO HO into NO NO NO!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

From Data Facts: 5 Things Not to do After You Apply for a Mortgage

Buying a home can be one of the most stressful adventures a person can embark upon. From choosing the home, negotiating the price, obtaining a mortgage loan, to securing ownership, there are many pitfalls that can derail the plan.

Consumers often mistakenly believe that it is clean sailing after the mortgage loan process has been started. If the credit score it good, they are good to go, right. Wrong.

There are negative actions that can be taken even after the mortgage loan has been applied for that can decrease or annihilate the chances of getting that loan closed.

Today we are going to discuss the 5 No-No’s. These are the actions that a consumer needs to AVOID after applying for a mortgage loan.

#1: Don’t charge new credit card debt. In many cases, the mortgage loan was narrowly secured based on the consumer’s debt ratio or credit score. In these instances, even a few hundred dollars in new debt can cause the ratios to swing out of favor or credit scores to drop.  Postpone any new purchases on credit. Opt instead to pay cash.

#2:  Don’t quit your job.  The mortgage loan will be figured on your (and maybe your spouse’s) income. Your employment status will be checked again before the loan closes, and if the bank finds out you are unemployed, the mortgage loan will most likely fall through. Quitting your job is one of the most surefire ways to spoil the mortgage loan process.

#3:  Don’t buy a car.  If you get car fever during your mortgage process, REFRAIN from acting on it. A car loan will show up as a new inquiry on your credit report, AND the debt could possibly skew your debt ratios enough to mess up your chances of closing on your mortgage. Trust me, a car is not worth losing your dream home.

#4: Don’t miss payments. Forgetting to pay a bill or paying it late has a tremendously negative impact on a credit score. Just one late payment could tank your credit score to the point that the new mortgage would be unattainable. Practice diligence in paying your bills on time, especially when trying to obtain a mortgage.

#5: Don’t pay off old collections. It is a common misconception that “cleaning up” your credit by paying off old collection will help you look better to creditors. This is often not the case. By paying off an old collection, the date of last activity (which is how the credit scoring model looks at collections) will be brought to the present. The old collection will look like it just happened, which could result in a credit score drop of 100 points or more!  Leave old collections alone, and only pay them at closing, if required.

Securing a mortgage is a big endeavor. It takes lots of time and energy. Be sure to avoid these 5 common pitfalls to ensure you get the mortgage you want!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

7 Steps to Protect Your Finances During a Divorce

We all hope it never happens to us. The “D” word.  Divorce.

It’s a sad fact that lots of marriages end in divorce, and sometimes the relationship is contentious and hostile. If you are facing divorce, protect yourself and your finances with these simple tips:

1.  Keep detailed records.  The first step is to commit to making certain that all financial arrangements and obligations are well-documented.  If you end up having problems with a creditor for a debt that is not your responsibility, documentation can help clear the issue up faster and with less effort.

2. Dissolve every joint account.   This is one of the biggest mistakes that divorcing couples make. One person will keep a joint account, and the other person finds out months or years later that the account has been paid late or sent to collection. Be aware that divorce decrees do not supersede contracts. In other words, if you and your ex split certain debts in the divorce, but your name is still on the debt, YOU ARE STILL RESPONSIBLE FOR THE PAYMENT OF THAT DEBT.  This is a biggie, and can completely tank your credit score and ruin your finances.

Remove your spouse’s name on any accounts that you plan to keep (such as your car, etc). Move the utilities and any other bills into one name. If you share joint credit cards, divvy up the balance and open a credit card in just your name, and transfer the balance over to the new account. BE SURE all joint credit cards are closed.

3.  Sell the house if possible. The best idea is to sell the house and split any profits. It is imperative to not walk away from your house with your name still on the mortgage.  If selling the house is not an option, the person who ends up with the house needs to refinance it in his/her name alone as quickly as possible.

4.  Divide all assets. Split all cash, property, and any other assets during the divorce. Do not share assets with an ex.

5.  Be on guard online.  An ex can do some real damage when armed with passwords to bank and credit card accounts. The first action should be password protecting your computer and your cell phone (this will ensure your ex does not add a sneaky spyware).  Change ALL of your passwords on all of your accounts to something your soon to be ex would not know. Do not use birthdays, anniversaries, mother’s name, dog’s name, or anything else that your former beloved would be able to figure out.  Phrases like “bobpleasedie” or “lovereallystinks” probably aren’t good ideas, either.  A long password (10 characters or more) with letters in upper and lower case and numbers is the best option.

6.  Check your credit report. This is a good all-round rule for everyone. However, it’s especially important after going through a divorce.  Pull a credit report every 3-4 months, and scour it to make certain all joint accounts are closed and that there are no accounts you do not recognize. Follow up on any errors and get them cleared up immediately.

7.  Change your will and life insurance beneficiaries.  When moving on after a divorce, make certain to review all important documents, and implement changes where necessary. Remove the ex’s name from your will and any insurance policies in which he/she is named.

Divorce is never a fun endeavor. However, by being educated about the financial facts and following these simple tips, you can make it much easier to move forward and avoid the financial pitfalls that many people fall into when ending a marriage.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

The Sticky Truth about Collection Accounts

Collection accounts can be a huge headache for consumers, and can wreak havoc on a credit score.

Debt collection in the United States is estimated to be a 12 billion dollar industry.  The way it works, in a nutshell, is when an account becomes overdue to the point the creditor does not think they will get their money, they sell the debt to collection agencies for pennies on the dollar.  The collection agency then attempts to recover what is owed.

Dealing with collections:

If a consumer has a debt sent to collections, he should receive a letter from the collection agency notifying him of the situation. If the collection is an error (reported incorrectly, or is not the consumer in question), he should contact the collection agency immediately to resolve the matter.

However, if it is a true collection, the consumer does have rights afforded to him under the Fair Debt Collection Act.

1: The collector cannot threaten you.

2: You can request the collector to not contact you, or only contact you by mail

3: A collector may not contact you before 8 in the morning or after 9 at night

3: The collector cannot tell you that you owe more than you really do

4: They may not publish the names of people who will not pay them

5: They are also not allowed to misrepresent themselves as credit reporting companies, attorneys, or government officials.

Once a person determines that the collection is valid, there are a couple of avenues to explore:

–          Pay the collection. A consumer may choose to negotiate with the collection agency and pay the balance of the collection. In this scenario, the consumer needs to MAKE CERTAIN that the collector sends all offers in writing.

–          Not pay the collection.  Deciding to not pay a collection may result in the collection agency suing the consumer. If the agency wins, the consumer’s wages may be garnished to repay the debt.

Unfortunately, either way negatively affects your credit score. Once a collection has been reported to the credit bureaus, it remains on the report for 7 years, whether or not the debt is paid off.

And, beware of paying old collections! Sometimes, consumers will mistakenly believe that paying off a collection account that is several years old will help to increase their credit score, and this is not the case. Paying off an old collection brings the date of last activity to the present, and the effect of the collection is felt all over again (which usually means the credit score drops).

A good rule of thumb is to try your very best to stay current on your payments. If you fall behind, strive to not let the account go into collections. If you do end up with collection accounts, be prepared to deal with collection agencies, and brace yourself for a credit score drop.  Once a collection hits your credit report, managing your other credit accounts wisely is the best way to rebuild your credit score.

(For more information on collection accounts and consumer’s rights, read the FTC’s Debt Collection FAQ’s).  

 ~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

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