You’ve probably heard or seen advertisements from debt settlement companies promising to eliminate half or more of your credit card or other unsecured debt.  In this current economic climate, debt settlements may sound like an attractive option to consumers facing mounting debts, but the offers often come with serious consequences that should be weighed fully before making a decision.

According to a recent AP article: “Since the start of the recession, the Better Business Bureau has received more than 3,500 complaints about debt settlement companies. Customers who hired the companies complained that they ended up deeper in debt, or ended up being sued by creditors.”

In response to consumer complaints of misleading and deceptive practices, the Federal Trade Commission (FTC) has issued a new debt relief rule to protect financially distressed consumers. The ruling applies to for-profit companies that sell debt relief services over the telephone, including credit counseling, debt management, and debt negotiation services that aim to reduce credit card or other unsecure debt.  Following is summary of the Telemarketing Sales Rule Debt Relief Rule issued July 29, 2010 by the FTC.

• Advance fee ban: debt relief companies may no longer charge a fee before they settle or reduce a customer’s debt.
• Disclosures: debt relief companies will be required to make four specific disclosures to consumers, including how long it will take for consumers to see results, how much it will cost, the negative consequences that could result from using debt relief services, and key information about dedicated accounts if they choose to require them.
• Misrepresentations: debt relief companies will be prohibited making misrepresentations, including specific misrepresentations commonly made in this area.
• Inbound calls: the rule extends the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising.

The advance fee ban provision will be effective on October 27, 2010.  All other provisions will be effective on September 27, 2010.  For more information on this important consumer protection ruling, visit http://www.ftc.gov/opa/2010/07/tsr.shtm.

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Springboard offers FREE First-Time Homebuyer classes where prospective homeowners learn what to expect in the home buying process.

• Preparing for homeownership
• Checking your credit
• Shopping for a home
• Obtaining a mortgage
• Closing your home Life as a homeowner

The pre-purchase education is approved by H.U.D., Fannie Mae, and Freddie Mac. Upon completing the First-Time Homebuyer class, you will receive a certificate of achievement. The cer- tificate meets the requirement of many mortgage lenders, and eligibility requirements for down pay- ment assistance, closing cost assistance and affordable homebuyer programs.

Due to H.U.D. guidelines, we are required to uphold an 8 hour mandated class. Please note both portions of the schedule for instruction must be completed to receive a certificate:

• Two (2) hours course prep time, completion of your budget, and ordering a copy of your credit report. Course prep time may be completed online. For those without Internet access, a workbook will be provided to you upon registration.
• Six (6) hours face-to-face classroom instruction. 9:00 a.m. to 3:00 p.m. In order to provide proper certification for the First Time Home Buyer’s class, doors will open at 8:45 a.m. and will close at 9:00 a.m. promptly.

Saturday, July 31, 2010 9:00 a.m. until 3:00 p.m. Light lunch provided.
Springboard Nonprofit Consumer Credit Management
2300 West Sahara Avenue, Suite 800 Las Vegas, NV 89102

RSVP required. Please email fthb@credit.org or call 800-294-1801

Do you want the home of your dreams? Would you like a nice dependable car? If the answer is yes, you may want to take a look at your credit score before applying for credit to purchase these and other items.  What IS a credit score? A credit score is a three-digit number that banks, lenders, and other creditors use to determine risk and the percentage rate at which money will be loaned to a potential borrower.  The higher the credit score, the lower the risk to the creditor.  The lower the credit score, the higher the risk to the creditor. We earn our terms depending on how well we manage our credit.

The Fair Isaac Corporation (FICO®) developed the most widely used credit score model. The FICO® score ranges from 300 – 850. The credit reporting agencies Equifax and TransUnion both use their version of the FICO® scoring model. Equifax uses the privately labeled “Beacon” and TransUnion uses the “FICO® Risk Score Classic”. Experian has discontinued using the FICO® scoring model as of February 14, 2009, and instead uses its own scoring model called Vantage ScoreSM.  The score ranges from 330 – 830. The Vantage Score was developed by the three national credit reporting agencies- Experian, TransUnion and Equifax.

Knowing there are different scoring models out there and that most lenders use THE FICO® we will outline the important factors that will help consumers know their score by learning how the FICO® scoring works. This information can be found at www.MyFICO.com as well as at our FIT Academy online course http://credit.org/blog/classes/

Your credit score is calculated and based on these top five factors:

• 35% – Payment History (This includes any public records, e.g. bankruptcies, tax liens, judgments as well as late payments and collections)
• 30% – Outstanding Debt (amount owed on specific types of accounts, balances on accounts compared to the limit, also known as utilization)
• 15% – Length of Credit (age of oldest account, average age of accounts, time since account activity)
• 10% – New Credit (number of recently opened accounts, proportion of accounts that are recently opened, number if credit inquiries, reestablishment of positive credit history following past payment problems)
• 10% – Types of Credit Used (number of accounts in use: presence, recent information on all types of accounts)

According to newly released government figures, freshman college enrollment is on the rise.  This is likely an exciting time for parents and young adults leaving home and living on their own for the first time. Unfortunately, this excitement can quickly come to an end if identity thieves enter the picture. According to the Federal Trade Commission (FTC), 18-29-year-olds account for 24% of all identity theft complaints.  The FTC estimates that as many as 9 million Americans have their identities stolen each year.  With the growth of social networking, young adults who share information easily online are especially vulnerable.  Parents can help their college-bound students by reminding them to take precautions to deter identity thieves.  Springboard recommends the following prevention tips for college students of all ages:

• Don’t carry your social security card with you.  Keep it in a locked safe place.
• Don’t carry unnecessary information such as PINS, passwords or social security numbers in your backpack or purse.
• Avoid storing personal information such as PINS, passwords or social security numbers on your laptop.
• Use a shredder to dispose of documents such as bank statements that may contain personal information.
• Don’t loan your license or college identification card to anyone.
• Don’t register while visiting websites or participate in phone surveys, marketing surveys, or contests (e.g. the car drawing at the mall).  Once a company buys a list with your information you will become a target of their marketing campaign, and this creates one more source for identity thieves to find and appropriate your personal information.

Springboard’s book, ID Theft: Protecting and Restoring Your Good Name, is available for free download.

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One thought that comes into a student’s mind before summer vacation is over is, “What am I going to wear next school year?”  Students can plan their expenditures for the upcoming school year by using these basic budgeting and spending tips.

• Prepare a spending plan. Figure out how much money you want to spend on clothes and other accessories.

• First, go through your closet and find out what items you have before you plan your trip to the department stores. The most common type of overspending is paying too much for things.

• Next, prepare a list of what you need. Donate any unused clothing that you will not wear to your local charity.  This will eliminate overspending on items you already have.

• Organize your list from head to toe. Find out what items are on sale and buy them one at a time.  You may start out buying all shoes, socks and undergarments in one week. The following week purchase your blouses and shirts.  Next, purchase pants and skirts.  Purchase your accessories last.   During the school year you can also purchase items as needed. Consider shopping at thrift stores, discount stores and taking advantage of retailers offering layaway.

• Before purchasing school supplies such as paper, pens, pencils or markers, wait until you receive your schedule of classes so that you do not purchase items you will not need.  Some teachers are specific about what is required for their curriculum so you do not want to end up with a backpack full of items that are not needed.

• Remember, coupon shopping is not just for food.  Many department stores advertise coupon items in your local newspaper. Watch for sales and clip coupons to help save money on your back-to-school supplies.

Photo: Mythoto

Now more than ever it is important for consumers to view their consumer credit reports. Identity theft is reported to be the fastest growing crime and the number one complaint filed with the Federal Trade Commission www.ftc.gov for the past five years. Many businesses are reviewing consumer credit reports on prospective employees, and insurance companies and landlords may require that you give permission for a credit check. For these important reasons, consumers should be aware of what is on their credit report.

Your Free Annual Credit Reports:

Under the Fair and Accurate Credit Transactions Act (FACTA) consumers can obtain their free credit reports once every 12 months at www.annualcreditreport.com or by phone: 877-322-8228 or mail at:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Your Rights to Additional Free Credit Reports:

Anyone can request an additional free credit report for the following reasons:

• You have been denied credit, insurance, housing, or employment within the previous 60 days.
• You have been a victim of identity theft and have reason to believe that information is incorrect due to fraud.
• You are without employment and plan to apply for employment within the next 60 days.
• You are receiving public assistance.
• If a negative decision, in whole or in part, has been made in relation to the information that is in your credit report. e.g. declined for a credit line increase.
• If your credit report has been modified due to an investigation that you requested.
• You live in the following states where the law states that you have the right to a free credit report:
• Colorado, Maine, Massachusetts, Maryland, New Jersey, Vermont and Georgia. (Georgia residents have the right to receive two annual credit reports free.)

Nationwide Specialty Consumer Reporting Companies:

FACTA includes free annual consumer reports from these agencies too!

ChexSystems is a nationwide specialty consumer reporting agency that collects and maintains information from member financial institutions such as banks and credit unions. If a bank closes your checking account because of insufficient funds, for example, it will make a report to ChexSystems that other banks will check when you apply for new accounts.
Toll-free number: (800) 428-9623. On the web: http://www.consumerdebit.com/consumerinfo/us/en/chexsystems/report/index.htm

Shared Check Authorization Network (SCAN) is owned by Deposit Payment Protection Services (DPPS) SCAN maintains a database of returned checks and instances of fraud. It provides check authorization and verification to its members, primarily retailers.
Toll-free number: (800) 262-7771 (U.S., Guam, and Puerto Rico) Fax: (800) 358-4506
http://www.consumerdebit.com/consumerinfo/us/en/consumerreports/index.htm
To Order by Mail: Print the order form from the www.consumerdebit.com website and mail to:
Deposit Payment Protection Services, Inc.
Attn: Consumer Referral Services
7805 Hudson Road, Suite 100
Woodbury, MN 55125
To Order by FAX: Fax the order form to 800-358-4506

TeleCheck – maintains a database of returned checks and instances of fraud. It provides check authorization and verification to member retailers.
Toll-free number: (800) TELECHECK (800-835-3243 not necessary to dial last 2 digits).
http://www.telecheck.com
TeleCheck Services, Inc.
5251 Westheimer
Houston, Texas 77056
Declined Check Information: (800) 366-2425

Medical Insurance Bureau MIB – Maintains medical records or payments. http://www.mib.com/html/request_your_record.html

First Advantage SafeRent (Formerly known as Unlawful Detainer Registry UDR)- maintains residential or tenant history. http://www.fadvsaferent.com

Choicepoint maintains employment history for background checks. http://www.choicepoint.com

CLUE – maintains insurance claims information. http://www.choicetrust.com

If you find inaccurate information reporting, the Fair Credit Reporting Act dispute process is the same for all above reporting agencies. Sample disputes letters can be found on page 113 of Springboard’s book, Consumer Guide to Good Credit, which is available for free download in English and Spanish.

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You’ve worked hard and deserve to enjoy that long-awaited vacation. Whether you’re relaxing near home or traveling abroad, taking steps to protect your personal information will help keep identity thieves from spoiling your summer fun. The Federal Trade Commission estimates that as many as 9 million Americans have their identities stolen each year. While avoiding identity theft is not simple, there are several common sense things that consumers can do. Springboard recommends the following prevention tips:

• Forward mail to a local post office when going on vacation or have a neighbor you trust pick up your mail.

• Do not place outgoing mail in your mailbox. Deposit mail in a U.S. mailbox or at the post office to reduce the chance of mail theft.

• Refrain from carrying unnecessary information such as PINS, passwords, or social security numbers in your wallet or purse.

• Photocopy your passport

• Photocopy all the contents of your wallet or purse. Copy both sides of each license, credit card, etc. This way, you will know what you had in your wallet if it is stolen and you will have all the account numbers and phone numbers to call and report the theft. Keep photocopies in a safe place – fire proof lock box, safe, or safety deposit box.

For more tips on identity theft prevention, Springboard’s eBook, ID Theft: Protecting and Restoring Your Good Name, is available for free download or view it online.

Photo: epsos

We’ve talked about ways to spot a loan scam, but if it’s too late to prevent being scammed and you’re already a victim, it’s crucial that you take the right steps to report the crime.

1.  Construct a narrative. Start by writing down your story. Include everything you can remember, but try to keep it concise. Talk about how the scammer first approached you and every step you took during the process. You’ll be repeating this story to different agencies, so it’s important to write it out so it is consistent and complete. The process of reconstructing the events of the scam will help you remember all the relevant details.

2.  Report the crime to the FTC. The first agency to file a complaint with is the FTC. Visit their complaint site at https://www.ftccomplaintassistant.gov/. The site has comprehensive instructions for filing a complaint, and you will be guided through the process there.

3.  File a complaint with the IC3 (Internet Crime Complaint Center). This resource is run by the FBI and the National White Collar Crime Center. They will process your complaint and refer it to the appropriate law enforcement agency for investigation. (http://www.ic3.gov/complaint/default.aspx)

4.  Call the Police. The police in the district where the crime was committed may be able to help you, but if the scammer used a fake address, the police may not be much help. You may report the crime to the police in the area where you live, but again, if the scammer was clever, the police won’t be able to track them down. Still, in cases like this where there is a financial dispute, it helps to have a police report on file (try to get a copy of the police report or report number for your records.)

5.  Write your credit bureaus. The scam will likely extend beyond your finances and into your credit. The scammers will probably have your social security number and identifying information, so you need to file fraud alerts to prevent identity theft. When you file the fraud complaint, you should receive free credit reports from the bureaus; look these over for accounts that are fraudulent and dispute them. (Download our “Consumer Guide To Good Credit” for more information on filing disputes.)

a. Credit bureaus:

1. TransUnion (www.transunion.com)
2. Experian (www.experian.com)
3. Equifax (www.equifax.com)

If you’re the victim of a scam and you feel overwhelmed, remember we’re always available and our expert counselors will be able to help you. If you have any questions, feel free to leave a comment right here on the blog or on our Facebook page.

It’s been said that the best offense is a good defense.  Knowing the warning signs of a loan modification scam is the best defense, and can prevent you from being victimized by scam artists preying upon your emotions.  If you are an at-risk homeowner, beware of the following three major warning signs of a loan modification scam:

1. A request for upfront monies – Avoid any individual or firm that asks for a fee in advance.  Instead, seek the assistance of a HUD-approved housing counseling agency that does not charge consumers a fee for housing counseling.  Visit www.hud.gov for a list of agencies in your area.
2. A claim guaranteeing a loan modification – Only a lender can guarantee a loan modification.  If the claim sounds too good to be true, it is.
3. Advice which instructs you not to pay or talk to your lender – Keeping the lines of communication open with your lender is an important first step in moving toward a workout solution for your situation.  Do not withhold your mortgage payment from your lender or issue it to any individual or firm promising to make payments on your behalf.

If you believe that you have been the victim of a loan modification scam, visit www.LoanScamAlert.org or call 1-888-995-HOPE (4673).

The Department of Housing And Urban Development (HUD) recently announced the launch of PreventLoanScams.org.

HUD is launching this important new consumer protection initiative in partnership with the Loan Modification Scam Prevention Network, a national coalition of public and private enterprises, led by the Lawyers’ Committee for Civil Rights Under Law and including agencies like Fannie Mae, Freddie Mac, and the Homeownership Preservation Foundation (HPF). Springboard was a founding member of the HPF and continues to be a proud partner in that organization. As a HUD-Approved housing counseling agency, we are committed to doing our part to help homeowners avoid foreclosure. In addition to one-on-one confidential counseling, we offer resources like HomeOwnership.org to help people learn more about loan modifications and other options available to help individuals save their homes and avoid foreclosure.

PreventLoanScams.org is an online reporting tool to identify and combat loan modification scammers. You may sign up there for email alerts, learn more about loan scams, or file a report if you are confronted by what you suspect may be a loan modification scam.