Is Credit Repair a Scam?

Desperate times make for desperate measures, and scams are certainly abound. In a report from CBS News’ SmartMoney.com, they advise readers against a plethora of scams, including credit repair:

Another popular scam to look out for is offers of credit repair. If your credit is a mess, time and time alone is what’s going to fix that. There are no easy fixes and anyone who tells you otherwise is probably looking to rip you off and will probably leave your credit score worse off than you started. The best way to repair your credit is to take on debt and handle it responsibly. You can also try reaching out to your lenders directly to see if they will remove some of your bad marks. They are under no obligation to help you, but it’s worth a shot.

This advice comes close to throwing the baby out with the bath water, so to speak. They are absolutely right — and GOOD credit repair services will agree — when they say that there are no easy credit fixes. Credit repair is a tedious task, and it takes plenty of patience and determination. And they couldn’t be more right on when they say that the best way to take care of your credit is by being responsible.

But to say that “time and time alone” will fix a bad credit situation is not entirely true. 79% of Americans have errors or false information on their credit reports. If there’s false information on your credit report, wouldn’t you rather have it taken off now than to wait it out?

At Veracity, we never tell our clients that credit repair is going to be easy, and we don’t promise to remove anything, but we definitely have the tools and resources to make a good go of it. Besides, if a client isn’t happy with Veracity’s services, they’re free to cancel at any time, with no obligation.

The article is also right on when they say that lenders have “no obligation to help you.” Lenders, who make money by loaning money at high interest rates, may have an opportunity in renegotiating debt that is at risk of being defaulted on. However, finding that a lender is misreporting information happens all the time, and at Veracity, we can work with credit bureaus and lenders to fix errors, thus helping heal your credit.

To call all credit repair companies a scam may be hasty. Good and bad credit repair services exist, just like good and bad mechanics exist. We suggest you do your homework like you would for any worthwhile investment.

Debt consolidation can often be the first step in credit repair

Much like credit repair, debt consolidation has become all the rage among consumers who are dealing with a rough economy and seeking solutions to their credit woes. Almost every day sees a new posting somewhere about debt consolidation, its benefits and detriments. Here’s a recent one from Nurido News:

http://www.pressemeldungen.at/86628/credit-repair-and-debt-reduction-strategies/

First of all, at Veracity we’ve said time and time again that you should always do your homework when working with any company that is working closely with your credit. Know your rights as a consumer and be sure to do some research on any company that is going to have access to your personal credit information.

One thing we at Veracity do not recommend to consumers or potential clients is to engage in credit repair if you are already behind in your bills. Credit repair services can be time-consuming, and during your time with a credit repair company you will have to pay for services. So if you’re already behind, trusted credit repair companies will most likely suggest you look into debt counseling and, possibly, debt consolidation, before looking into credit repair. Due to the difficult nature of credit repair, it is essential for finances to be stable and monthly bills to be paid on time to prevent further damage. Your credit can be terrible and still benefit from repair, but to maintain it you must stabilize your finances and make monthly payments on time.

In the end, though, every credit situation is completely unique, and so it is hard to advise on the proper steps a person should take without first reviewing their unique situation. That’s why Veracity suggests consumers contact us at 1.866.518.2194 or call a debt counselor for more information on what you need to do to begin repairing your credit and securing your own personal, financial future.

Magical? No. But credit repair CAN be practical

This in from Nurido News:

There is absolutely nothing magical about credit repair. This means that what ever the hustler on the phone or Internet says he can do for you for $1500, you can do for yourself in a few hours at the most.

Wow! We don’t know what credit repair service this refers to, but it certainly wasn’t Veracity Credit Consultants.

First and foremost: if a credit repair service tries to charge you $1,500, keep moving. Veracity’s fees range from $49 to $79 a month, depending on the level of service, with a one-time, membership fee of $69 to $99. For $1,500, you could utilize Veracity’s highest level of service for almost a year and a half! Just imagine how much we might be able to do to repair your credit in that amount of time…

The author makes some good points, such as:

Rule number one, is that no one can erase a bankruptcy from your credit report. Anyone that claims that they can is flat out lying!

He’s right. Furthermore, at Veracity, we remind our clients that this applies not just to bankruptcy, but to ANY LEGITIMATE DEBT. If it’s legit, then it’s legit. We can’t make it go away. Nothing can make it go away, except payments or time.

Eliminating legitimate debt or skirting the law is not what we do. What we get taken off your credit report is false information that had no business being there in the first place. Mistakes are made, of that you can be sure, and what we do is eliminate those errors, thus improving your credit score.

In the article, the author also advises against blaming the credit reporting agencies (i.e. credit bureaus), which is good advice. They simply calculate your score based on information reported to them. The author also mentions the “seven year” rule, which states that negative credit information will disappear from your report seven years after your last payment has been made. Also true, though you have to wonder who would want to wait it out when they can begin paying it down or consolidating it now. Because remember, if it is legitimate, it’s going to stay there … for seven years, at least.

We’d like to expand a little bit on this good piece of advice:

Get a hold of all three reports from the three major credit reporting agencies and compare them. It’s not uncommon that they don’t all match and that would be your first clue that there is a mistake.

See, the author’s right when they tell you that the first thing you need to do when it comes to credit repair is to pull your three reports. And, furthermore, it’s true that they commonly do not all match. However, that doesn’t necessarily mean there is a mistake.

While it is possible that a certain credit bureau may be reporting on different, more or less information, if the scores are only a few points off, it can be an issue of timing. Some information is processed at different times of the month, depending on the creditors and the credit bureaus. Because of this, it is common for scores to be slightly different at any given time. Furthermore, each credit bureau uses a different scoring algorithm to calculate their scores, meaning that the scores will almost certainly never match.

Now if the scores vary by a lot, then the author is right: there’s a good chance that a mistake exists somewhere. What’s important to look for is drastic differences between scores or information being reported.

The author also suggests that credit repair is “surprisingly easy” and that the reader “simply look it up.” While, there’s a lot of information that can be gotten online, none of it makes up for credibility and experience, both features found at Veracity!

Understanding and repairing credit can be a complicated matter

We found yet another precautionary article concerning credit repair, this one coming from Diane Lade of Florida’s Sun-Sentinel:

http://www.sun-sentinel.com/features/time-money/money/sfl-credit-fix-tips-062709,0,266965.story

Ms. Lade, like so many others before, offers four rules, also laid out by the Credit Repair Organization Act, on what not to do when choosing a credit repair service:

  • Do not pay a credit repair service up front for services.
  • Do not create a new credit identity by applying for and using an Employee Identification Number.
  • Do not dispute ALL the information in your credit report, especially when it’s true or accurate.
  • Do not use a credit repair company that doesn’t inform you of what you can do on your own.

Spotting a company attempting to break any of those rules is a surefire way to know you’re dealing with a fraud. A good credit repair agency is a transparent one. If a company is honest and up front with you about their services, all of your options, and the best way for you to achieve your goals, then they are doing their job right. If a company seems to be simply seeking out clients for the sake of profit, be sure to take a closer look at all of their credit repair tactics. Make sure that the credit repair agency you work with is out for your best interests, not their own.

Veracity would like to comment on a few other tips made in the article:

Close out accounts slowly over time, newest first.

While each person’s credit situation is unique, in most cases, eliminating credit will not improve your credit score.

You see, a credit score is broken down into several categories including payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and types of credit used (10%).

Any time you close an account it can affect your credit history. Even if it is a fairly new account, it has already been opened, and closing it thereby lessens your credit history. You can do more good for your credit by keeping accounts already opened current and at a low balance. If you are “using” credit and immediately paying it off, it will do more good for your credit than simply closing the account. We suggest you keep your balances below 25% for optimal results.

Furthermore, when you close an account you lessen your overall credit limit. Say you have three cards, each with $1,000 limits, and you owe $500 on one, $250 on another and $0 on a third, the newest of the three. If you close the third card (under the guise that you never use it), you’re effectively lowering your overall limit from $3,000 to $2,000. Now, instead of being at 25% of your limit ($750 of $3,000), you’ve created a smaller limit ($2,000) but have the same balance. Now your balance is more than a third of your limit, which will affect your credit score negatively. This also goes for another piece of advice the article gives:

Keep your credit limits modest, even if lenders offer to raise it.

We actually suggest you only take on as much credit as you can handle. Too much credit can actually be seen as a risk in certain situations. However, if you are only using $300 of a $2,000 limit it looks much better than the same balance on a $1,000 limit, right?

If a consumer’s worried they might be carrying too much debt, there’s debt-to-income rule-of-thumb that sheds light on the situation. This article from Bankrate.com summarizes it well:

Click here.

To translate, your debt-to-income ratio is your overall monthly income divided by all your debt obligations (which include long-term debt such as mortgage or rent, car payments, student loans, credit cards and revolving credit and exclude recurring monthly bills such as electric or groceries). According to most sites, keeping your debt-to-income ratio below 36 % is ideal in the eyes of lenders.

Online calculators like this one can help you see where you stand with your debt-to-income ratio:

http://hffo.cuna.org/13479/article/316/html

Ms. Lade also offers this advice:

Open a savings account to show creditors you have reserves.

At Veracity, we’ve seen so many different credit situations that we know this can hold true with certain types of creditors. However, for the most part we find that creditors place payment history over the consumer’s cash reserves. In the end, it can often depend on the particular creditor more than the consumer.

The point we want to make at Veracity is that you don’t have to shut down all of your credit to make your credit score better. Instead, we suggest sticking to budgets, making timely payments and using credit wisely so that you can optimize your credit score and have access to all the things good credit has to offer.

Good credit, good rates begin with good habits

Mr. Steve Bucci with Scripps News’ Debt Adviser really hits the nail on the head with his advice to a forlorn, wannabe homeowner:


http://www.scrippsnews.com/node/43990

Sometimes at Veracity, we find information like this that can’t be said better ourselves. Like Veracity, much of what Mr. Bucci preaches is common sense and strong money-management. By managing money wisely and saving money whenever the chance arises, consumers can almost take the guess-work out of credit repair by avoiding it entirely.

However, Mr. Bucci and Veracity Credit Consultants both understand that saving money and adhering to a budget aren’t always the easiest things to do. When you find yourself getting into credit trouble, we like Mr. Bucci’s advice once again:

Keep paying down your debt based on your budget, and that alone will help you repair your credit. Paying your bills on time makes up 35 percent of your FICO score.

What he says is true. Although there are several elements to a credit score, payment history is the most important factor in your credit report. By following Mr. Bucci’s advice, you are essentially proving to lenders that you are a reliable borrower who pays their debts on time.

It is clear that Mr. Bucci knows his stuff when he gives this piece of advice, as well:

As you know, you can’t erase any of the accurate negative information on your credit report such as your bankruptcy. But each time that new positive data is reported to your credit file, your negative history will count for less. In addition, you still can make sure that all items that are on your report are accurate and not out of date. Get a free copy of your credit report from Annualcreditreport.com. If you don’t recognize a negative entry in your file or it’s over seven years old, dispute it with the bureau or the lender reporting the item.

At Veracity, we help you contact the right people and take the proper avenues in getting erroneous information removed from your credit report. We also support AnnualCreditReport.com as the only place where you can receive a yearly, free, credit report (although companies like Equifax also offer free credit reports when you enroll in credit monitoring, which can help you keep track of your progress when repairing your credit).

In the end, though, Mr. Bucci’s advice toward frugal living and endless saving is the best piece of advice when it comes to credit repair. Not only will this help keep balances low, but it will give you an extra boost when you finally find that home you’ve been looking for. And if you keep your credit optimized, you’ll find the best rates to go with it, too!

Knowing consumer rights prevents falling to scammers

At Veracity Credit Consultants, we cannot stress enough how important it is to know your rights as a consumer. There are three major laws in place to help protect consumers from companies operating outside of CROA and FCRA laws, such as the company featured in this article from Inside ARM:

http://www.insidearm.com/go/arm-news/credit-repair-operation-settles-with-ftc-company-made-false-claims-and-charged-illegal-up-front-fees

The Credit Repair Organization Act specifically addresses this issue, but we always feel that it bears repeating the important facts.

First and foremost, the law that this company violated was charging money up front before rendering services. It is against the law to do so, and consumers should be wary of any company that charges first and acts later.

When you sign up with Veracity, the first thing we do – prior to charging you a one-time, start-up, lifetime membership fee – is create a Veracity CORE credit profile. Each profile is tailored to each client’s unique credit situation, thus ensuring that we take only the best measures in helping remove erroneous and false information from credit reports in order to optimize credit scores. Furthermore, there is a right of rescission period, which varies from state to state. Regardless, consumers should make sure they are receiving a service before a company begins charging their account.

Another good point that comes out of this story is that not only are guarantees illegal, they are impossible to make. The fact of the matter is that credit repair services can only remove erroneous information from credit reports. Legitimate debt cannot be erased, only paid off.

Protecting the consumer from false claims is just another aspect of the CROA, and another way that federal law protects consumers against fraud and scams.

Does closing a standard brokerage account affect credit scores?

At Veracity we’re always trying to further educated consumers on all different aspects of credit. We found this question posted online and thought we’d give our insight:

I know with credit cards and such, closing them can have a negative effect on credit scores. But does this apply to standard brokerage accounts like a Charles Schwab or Fidelity?

Generally speaking, closing a brokerage account does not apply to your credit score the way closing a credit card would, and should not affect your credit score negatively.

However, when opening a brokerage account, many firms will do a “hard” credit pull. Technically, you must give permission for a hard credit pull and they are common when seeking most kinds of credit or insurance. The hard credit pull can have a temporary, negative effect on your credit score, though it will usually rebound from hard pulls over time.

Because brokerage accounts have no terms of payment, there is no reporting to the credit bureaus, and thus no affect to your credit. The exception to this rule would be if you were to close your account with insufficient funds and you were to be reported for collections.

Otherwise, standard brokerage accounts, opened or closed, have no inherent effect on credit scores.

Getting out from under credit debt a practice in practicality

Here’s an article coming out of Veracity Credit Consultants’ home state of Colorado about how to get out from under credit card debt:


http://www.koaa.com/aaaa_top_stories/x528752199/How-to-get-out-from-under-credit-card-debt

While some credit advice columns can be short on information and a little sparse when it comes to practical advice, this piece by John W. Schoen is both thorough and extremely accurate.

First of all, as a credit repair agency, we at Veracity cannot stress the importance of good financial habits enough. Chances are, if you need credit repair, you may be beyond that point. But if you do choose credit repair to help you out of your credit funk, remember that good fiscal habits are the cornerstone to maintaining good credit, once you’ve again established it.

In a nutshell, Mr. Schoen’s article is a practice in practicality: pay your bills on time, adhere to a budget, keep a spending journal, make the biggest payments you can to avoid extreme interest charges, seek help and consultation and, of course, watch out for frauds.

We cannot find a single bit of fault in Mr. Schoen’s thorough evaluation of how to get out of debt. But we would like to expand on one thing.

When Mr. Schoen warns against frauds, it would be good to mention, too, that the scenario Mr. Schoen lays out in his article is not a good one for credit repair. A credible credit repair agency would never advise a person falling behind in paying their bills to enroll in credit repair services. Credit repair is something a consumer should look into after they’ve achieved a comfortable spot financially. After all, credit repair has fees, too, and it would do no good to add more fees onto an already stretched budget.

Before looking into credit repair, we at Veracity suggest you find a comfortable place first. That way you can focus on what’s important: optimizing your credit score.

The Time Has Never Been Better To Take Advantage Of Credit Repair

Veracity Credit Consultants is always trying to find a way to remind potential clients how they can use credit repair to their benefit. This article on government cash stimulus is a perfect example of the peripheral role credit repair plays in the overall scheme of your finances:

http://www.riograndesun.com/articles/2009/06/25/news/doc4a42730734eaa495744577.txt

While none of these stimulus topics seem to have much to do with credit repair, it would do well for consumers to note that by using credit repair they can help to raise their credit score and lower their rates on home mortgages, auto loans, insurance and credit cards. By combining stimulus packages and tax credits (such as the one being offered to first-time homebuyers) with a good credit score (and thus good rates), consumers can benefit tenfold.

Federal Law And Consumer Watchdogs Flesh Out Pesky Scammers

If it seems like Veracity Credit Consultants is beating a dead horse when it comes to talking about credit repair scams, it’s only because it’s such a hot topic. A poor economy and high unemployment rates are causing credit problems for folks everywhere. And wherever people are desperate for solutions, scams are sure to turn up.

Fortunately for everyone receiving credit repair services or involved in the credit repair industry, precautionary measures are being taken to counter the efforts of scam artists.

For one, the Credit Repair Organization Act http://www.ftc.gov/os/statutes/croa/croa.shtm clearly outlines a consumer’s rights when dealing with credit repair agencies, and exactly what they can and cannot legally do.

But as a further precautionary measure, consumers are getting together in order to ensure fair credit repair tactics. Take, for example, the Ethical Credit Repair Alliance and chairman Ben Hanania: http://pressmediawire.com/article/Consumer/Consumer/Credit_Repair_Scams_A_Warning_For_Consumers/21139

In the article, Mr. Hanania recognizes the need for good credit, citing how poor credit can result in higher mortgage, car loan, credit card and insurance rates. But the real gem of Mr. Hanania’s sound advice comes next:

…the truth is, it’s impossible to remove negative information from a credit report if the ‘black marks’ are accurate and timely.”

He’s absolutely right. That’s one way to know right away if you are dealing with a sketchy credit repair service. No service, no matter how good, can eliminate negative marks if they happen to be the result of legitimate debt. A good credit repair service may help remove erroneous information from your credit report, consult you on your credit options, help you create a game plan for reducing your debt and educate you on how to optimize your credit and maintain it, but even the best credit repair services cannot erase documented debt.

The article, written by Kathleen Hanover, goes on to outline three red flags when it comes to choosing a credit repair service:

  • The company wants you to pay for credit repair services before they provide any services.
  • The company suggests that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
  • The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current.

All of those “red flags” are spelled out in the CROA, too, but considering how important your credit is to you, it bears repeating!

At Veracity, we’re looking out for your best interest. That’s why we are so transparent about what we do. We always recommend the consumer do their homework when choosing credit repair, or any kind of repair for that matter. And at Veracity, if we do not feel that you are in a position for credit repair (perhaps you are having a hard time paying current bills), we will tell you as much and advise you to seek further counseling.

Our dedication to ethical credit repair and optimizing clients’ credit is the backbone of our success so far. We hope our reputation precedes us.

Take The Bus, Don't Make A Clunker Out Of Your Credit

Here’s a link to an article about “cash for clunkers,” another government-sponsored program designed to improve another depressed market:

http://www.autocreditexpress.com/blog/2009/06/24/cars-clunkers-and-bad-credit-car-loans/

For once, Veracity Credit Consultants would like to simplify on a theme instead of expand upon it. As the article points out, these government-mandated consumer boosts aren’t always practical.

An even more important question for bad credit car loan customers is how many of them are in the market for a new car? Even if they are driving a car that meets these requirements, what kind of new car are they going to qualify for? With the high cost of credit, even a $4,500 down payment (along with manufacturer incentives) will keep the list of affordable vehicles rather short.

Another thing to consider is that although the additional cash will put bad credit car buyers in a better equity position in their new car, subprime lenders will still apply the same lending criteria. This means that buyers will still have to come to the table with a cash down payment and one that is fairly close to, if not the same as, current requirements.

Veracity suggests you beware of putting the horse in front of the cart (or, the car, as the case may be) in this situation. The point this excerpt of the article makes is that throwing cash at the problem won’t solve the issue of high rates. In fact, we would argue that the only method to dealing with high rates is a better credit score. And that’s where credit repair comes in.

Before purchasing a car, or even more so a home, Veracity suggests you look at your options and your immediate needs. If you are in a good place financially insomuch as you’re paying your bills on time and keeping up with payments, we suggest you first pull your credit reports and see what your current credit situation is.

If you have credit report, with errors and inaccuracies, that is causing you to have a low credit score, you may want to consider six to 12 months of credit repair with a reputable credit repair service before purchasing a car.

Patience is a virtue when it comes to credit matters. At Veracity we like to remind our clients that credit repair takes time and determination. Your credit didn’t get to the point it is overnight, and it can’t be optimized immediately, either. So when it comes to major purchases, be patient and make sure you’ve optimized your credit situation in order to save yourself thousands of dollars in the longer run.

How Long Do Credit Reports Take To Reflect Changes In Credit Utilization?

Veracity found this general question posted, and thought we’d give our insight on the subject:

So I’m ready to apply for a new credit card, and I understand I should pay off the balance on my main card now, so that my “credit utilization” isn’t too high. Once I do that, how long does it take for the credit agencies to see that change and update my credit reports accordingly?

First of all, you’re applying one of Veracity’s key pieces of advice to your own credit repair: paying your bills. At Veracity, unlike some other credit repair agencies, we ALWAYS suggest you pay ALL your bills, and on time. This is the single easiest way to to achieve the best credit possible.

Now, when the question refers to “credit utilization,” we’re pretty sure what they’re referencing is your usage-to-limit ratio. No matter how many credit cards you have, this number is always very important. The more cards you have with little or no balance the better: this shows a low usage compared to a high limit. In most cases, by keeping your overall usage balance to 30 % or less of your overall limit, you can maintain your credit. And lowering that percent (or, as the person in question suggests, paying if off altogether) will likely improve your credit score.

Now, as far as how long it takes credit agencies to notice your progress… Well, it really depends on when the creditors being paid off report to the agencies (referred to as “The Big Three” credit bureaus in the credit industry). For instance, maybe your Capital One account sends its information on the 5th of the month and your Chase account sends in their reports at the 25th of the month. Now, if you pay you make your payments in full on the 15th of the month, that means that you CapOne account will show a balance for 10 days previous, while your Chase account may never show a balance at all.

The best option, clearly, is to pay your balances in full, especially if you’re aiming to achieve an optimal credit score for a home mortgage application. Otherwise, remember that there will always be small swings in your credit report, but so long as you keep your balance below 30 % and make regular, timely payments, your credit score should reflect your diligence in due time.

Credit Repair Really Does Work, But Watch For Outrageous Claims

Nearly six years after we’ve begun repairing consumer’s credit here at Veracity – multitudes of consumers and credit experts are jumping on the credit repair bandwagon, such as Diana Golobay at HousingWire.com, who wrote “Wrecked Credit? No Problem!”:

http://www.housingwire.com/2009/06/16/wrecked-credit-no-problem/

Veracity Credit Consultants likes Ms. Golobay’s enthusiasm for credit repair. She’s got a point that, when it comes to obtaining an auto loan (or a home mortgage), credit repair can lead to better rates, saving you, the consumer, thousands of dollars.

Unfortunately, like many consumers, it appears that Ms. Golobay might be the victim of some less-than-reputable claims. You see, the credit repair agency she speaks of claims that it takes:

“two to four months to clean up a credit report, although the $500 service lasts for a full year, according to company statements.”

Furthermore, Ms. Golobay also writes:

Typical issues Credit Rewind sees in troubled credit include charge-offs, foreclosures, bankruptcy, repossession and “slow pays.” The company touts its service as an utterly legal way to erase those marks from credit scores…

First off, any company that claims to remove bankruptcy legally is not telling you the truth. Why? Because it’s against the law and cannot happen. Bankruptcy is a public record, and public records have scores of information and records linking a person to their bankruptcy.

Bankruptcies are difficult situations, to be sure, but the only thing that can erase a bankruptcy from a credit report is time – typically seven to 10 years. The exception to this rule is if the bankruptcy is an error, often resulting from a merged report or mistaken reporting or identity.

At Veracity, we suggest you be wary of such claims of “erasing bankruptcy,” and if you have one, work on other areas of your credit and wait it out.

Furthermore, Veracity doesn’t put a time line on helping a consumer repair their credit. There are several reasons, including a person’s unique credit situation, along with laws that allow bureaus and creditors 30 days just to respond to disputes, that make “two to four months” difficult to achieve. At Veracity, most of our clients stay with us for six months, at least, and up to one full year to achieve optimal results. And our basic service, plus one-time lifetime membership fee, equals just more than $500 for a full year, yet our clients can cancel anytime free of charge.

Ms. Golobay wraps up her synopsis with this statement:

The emergence of this trend where credit is not an issue and any scratch, dent or crater in credit history is only a small fee away from deletion illustrates an alarming view that consumers deserve the loan they want today no matter how badly they performed on a credit card yesterday.

Veracity feels that might be over-simplifying the matter some. Remember that we suggest always paying your bills on time as the first way to maintaining your credit.

More importantly, we hope consumers realize that repairing credit just isn’t as easy as some people would lead you to believe and that it takes time and perseverance. And under no circumstances would Veracity ever claim that “any scratch, dent or crater in credit history is only a small fee away from deletion.” Legitimate debt and public records cannot just be erased. At Veracity, we never encourage our clients to dodge legitimate debt.

If credit repair is now starting to seem a little more difficult than some people make it out to be, that’s because it is. However, a good, credible credit repair service can take a lot of the hassle out of the process. If you want to know how, call Veracity today at 1.866.518.2194 for a free consultation.

Credit Repair Is Not Always For Everybody

Tough economic times make for a lot of hard-luck stories, such as this unfortunate situation in which a desperate consumer writes financial columnist Harry Gross for some much-needed advice on what to do, and who to trust:

philly/business/20090616_Harry_Gross__Credit_counseling__It_s_not_easy_to_separate_wheat_from_chaff.html

While we at Veracity trust the advice of seasoned experts such as Mr. Gross, we’d like to add our own bit of advice to this situation.

First of all, we agree with Mr. Gross when he says:

The problem of seperating the good from the bad applies to almost every service in some way.

That’s why at Veracity we hate to see one bad apple spoil the bunch. Not all credit repair services are scams and, just like all mechanics are not a scam, either. In fact, many in both industries are accredited, reliable and trustworthy. We suggest that, before committing to any credit repair service, you do your homework by looking for accreditation. You can:

Using that previous link, there are a lot of ways to expose fraudulent credit repair companies. But the bottom line is this: If a credit repair company guarantees anything to you they are breaking the law.

Now that we’ve gotten credibility out of the way, let’s talk briefly about whether credit repair is even the right option.

See, while we appreciate Mr. Gross’ insight into finding a credible credit repair agency, Veracity recommends you consult with a credit expert before even beginning to look into credit repair.

Essentially, Veracity’s theory when it comes to credit repair is this: if you’re in a situation where you cannot even pay your bills on time, then credit repair might not be for you. In the case of the couple in question, seeing as they are “behind in our credit-card payments,” there’s a good chance that they have bigger fish to fry right now. Credit repair cannot necessarily help them and, in fact, could add to their frustrations by becoming another bill to pay.

As we’ve always said, too, every credit situation is unique, and there’s no broad, cut-and-dry solutions to credit repair. If you’re in doubt whatsoever, you can always contact us at 1.866.518.2194 for a free consultation. If we don’t think you’re in a position for credit repair, we’ll say so, and offer you some alternative solutions instead. Because, in the end, the sign of a reputable credit repair service is one that puts your best interests first.

Do Your Homework When Choosing Credit Repair

Just a reminder that, just like in any service industry, there are upstanding credit repair companies that really do care about customers, and there are less-than-ethical alternatives. There has been some press recently about credit repair services with poor customer service and credibility.

Credit repair services are perfectly legal and are even governed and sanctioned by federal law. It is, after all, your credit. So disputing inaccurate and/or misleading information is your right as a consumer, and credit repair is an extension of these rights. Just like you can seek out a professional to repair your car, you can similarly seek out Veracity Credit Consultants to help repair your credit, legally.

While credit repair services are legal, scams exist in the credit repair business as they do in every business. So it always pays to do your homework before enrolling with a credit repair service. Veracity suggests you research information on a company’s number of clients served, years of experience, compliance with Federal Trade Commission guidelines, as well as relevant governing laws such as the Free Credit Reporting Act and the Credit Repair Organization Act.

Here at Veracity, we’ve been repairing clients’ credit reports since 2003. Veracity also actively promotes legitimized credit repair in the marketplace. Veracity’s highly-trained credit specialists have encountered and successfully overcome almost every credit problem imaginable. And that is why the majority of new clients that come to Veracity do so through referrals from past clients.

You can read some of Veracity’s testimonials to read what past clients have to say.

Good credit is vital to achieving financial peace of mind. Do your homework when it comes to joining a credit repair service. It could be the most important financial decision you’ll ever make.

Tax Credits Are Nothing Compared To The Benefits Of A Higher Credit Score

The federal government has been investigating some new avenues in an attempt to revive the currently depressed housing market. Take, for example, this article about the proposed tax credit increase – from $8,000 to $15,000 – for first-time homebuyers:

http://bloomberg.com/apps/news?pid=20601087&sid=alfbV3LXPE_E

One reader responded with this inquiry:

… Won’t even talking about doubling the credit next year have the effect of hurting home sales this year? If I thought the 8k would expire, I might feel compelled to buy sooner rather than later; but if I think there’s a good chance I can get 15k next year AND benefit from the plunging house prices, why would I buy now?

That’s a pretty legitimate question, if the tax credit is going to double next year, why would you buy now?

At Veracity, we’re not real estate experts, but we are trusted partners of both the National and Colorado Associations of Mortgage Brokers. So we do understand the effect your credit score can have on your home mortgage. Since credit is so unique per individual, and mortgage rates depend so much on the lender, location and other variables, it’s nearly impossible to make any exact calculation as to how much money you can save with a good credit score.

However, it is generally agreed that some of the best rates go to consumers with credit scores over 700. So, with that in mind, it’s probably safe to assume that a 600 credit score could cost you a couple of percentage points when it comes to your mortgage rate. And a couple of points difference in mortgage rate percentage can equal a lot of dough.

The point is, Veracity encourages you to not only take advantage of housing tax credits when it comes to buying a new home, but take advantage of credit repair, too. Veracity’s customers often see results (i.e. increased credit scores) within six to 12 months of membership. So, while a tax credit increase of $7,000 is tempting, the real reason you may want to wait six months to a year to buy is so that you have time to achieve a more optimal credit score. After all, a better credit score, leading to even a 1 % better mortgage rate, could save you tens of thousands of dollars over the next 30 years, making that mere $7,000 savings seem rather insignificant.

So our advice at Veracity is not to rush into buying a home, because repaired credit can be tantamount to a better mortgage rate, and that means major money saved in the long haul. Tax credits are just the tip of the potential iceberg of savings!

Do-It-Yourself Credit Repair

After reading a fair share of misleading credit repair advice on the web, we found this article by Examiner.com to be a refreshing review of the right things to do when it comes to do-it-yourself credit repair:

You see, at Veracity, we approach everything we do with complete transparency. We do not claim to do anything that you cannot do yourself. We do however, for the most part, have greater experience with the information and tools needed to repair credit.

If anything, we think Leslie Davis sums up DIY credit repair pretty well when she says:

It is possible to fix your own credit if you have the tenacity, diligence, stubbornness, patience and time to harass all three bureaus endlessly.

Yep. That’s about right (although we don’t recommend “harassing” anyone). And that is precisely why credit repair services like Veracity exist in the first place. Law allows for you to repair your own credit, to request credit reports and file disputes with the three bureaus. However, knowledge doesn’t always equal time. And you need plenty of that to put in all the work required to repair your credit.

What Ms. Davis tells you about credit reports is true: You are entitled to a free one every year (which, as she mentions, can be obtained at AnnualCreditReport.com). Once you’ve deciphered your credit report, then you can approach credit repair DIY-style by beginning to file disputes and awaiting responses.

But don’t be surprised if credit repair is a bit overwhelming by yourself. After all, your credit took a long time to get in the shape it’s in, so repair isn’t going to happen over night. Veracity has the diligence and experience needed to deal with the credit bureaus and get the best results.

Ms. Davis gives a 12-step summary concerning credit repair that is both informative and very accurate, including one of Veracity’s tried-and-true pieces of advice: paying your bills on time. As Ms. Davis points out:

Most people with high 700 or low 800 scores pay off the balances religiously. In doing so they avoid the interest associated with using the credit and boost their scores.

And she goes on in the next step:

If you have existing debt, the best way to get the scores up is to pay down the debt. If you do carry credit card balances, spread out the debt over multiple credit cards. Opening new lines of credit involves credit inquiries. This will have an impact, but it will be offset by the benefit of low balances, assuming that is possible. Sometimes there is too much debt involved to pursue this tactic. If you are already close to the limit on several cards, it is not a good idea to apply for additional credit. It would do more harm than good.

This second section goes beyond the “pay your bills” common sense advice, bringing up another good point. If you are having credit issues and you are trying to repair your credit, think twice before applying for new lines of credit. While it will increase your overall balance, there is the initial negative that comes with your credit report being pulled (which will happen any time you apply for new credit) and the fact that, if you’re already in debt, you probably don’t need more.

Ms. Davis’ advise and 12 steps to credit repair are something that we, at Veracity, can get behind. But if you find DIY credit repair to be too much, just contact us and we can help you through the process and get you on your way to financial freedom.

Credit Repair From A Credit Repair Company

By jumping to the conclusion that all credit repair services are a scam or are out to take consumers’ cash, some financial advisers are willing to lead those in need away from the credit help they desire.

This article by Jordan FeRoss found at pressemeldungen.com is careful not to do that. FeRoss and his team of credit repair experts at MSI Credit give some encouragement that we, at Veracity Credit Consultants, can stand behind. Check it out:

http://www.pressemeldungen.at/85853/credit-repair-from-a-credit-repair-company/

For the most part, FeRoss’ short synopsis of the credit repair service is accurate, and in some cases, very accurate:

Consumers who contact the credit bureaus themselves to have incorrect information removed generally have a hard time doing so without the help of a credit repair service. Even consumers who have a legitimate complaint can run into problems when dealing with the credit bureaus. A credit repair service has experience, however, when it comes to dealing with credit bureaus and can make progress where an individual can have a hard time.

It is often mistaken as being in our own interest for credit repair companies to sound their own horn. Sure, we’ve got bills to pay, too, and we need clients in order for our own company to stay afloat. And, as FeRoss points out, there are some expenses involved in repairing credit. But credit repair agencies that are in the business only for profit give the rest a bad name.

See, at Veracity our motive is to help you repair your credit within the law and within your rights. If we ever fail to please our customers, we always give them the option of canceling their membership with no risk or obligation.

We’d also like to commend the article on another strong point made about credit repair: While credit repair can help you remove negative, erroneous information from your credit report, it is important for the consumer themselves to learn to be responsible and stick to a firm budget in order to maintain any repairs that are made. As FeRoss puts it:

Once the debts are repaid customers have to stick to the budget they made or they could find themselves back in the same situation.

And as he also points out, a good credit repair company goes beyond just contacting bureaus for disputes. A good credit repair service helps you to design a plan and a budget, so that when your credit improves, you are able to maintain it. As the old saying goes: “You can lead a horse to water, but you can’t make it drink.” The key to credit repair is you, the consumer.

Taking The Frustration Out Of Repairing Your Credit

Admittedly, credit repair services are a mixed bag, and therefore they get a lot of mixed reviews. A lot of credit analysts tout do-it-yourself credit repair. Here at Veracity, we’re not just touting credit repair because that’s what we do and it’s how we get paid, we tout it because it is a valuable service that works, making life a little easier for you in the process.

We found the article “How to Take the Frustration Out of Repairing Your Credit” by Chris A. Smith at Pressemeldungen.com (http://www.pressemeldungen.at/85296/how-to-take-the-frustration-out-of-repairing-your-credit/) to be very informative, and we’d like to expand on it a little.

In the article, Mr. Smith encourages consumers to look into credit repair:

You’re willing to pay for [credit repair] service because it makes sense.

He’s right … it does!

Do it yourself credit repair kits and other resources such as sample letters and e-books are available at literally hundreds of different web sites. Trying to repair your credit using these tools is akin to trying to repair your car using the owners manual. Both experiences will prove frustrating, time consuming and will come with no guarantee that the repair will be fixed after you are done.

At Veracity, we believe in you, and we’re sure that you’re capable of fixing your credit, if you absolutely have to. But do you have the tools or experience? If not, wouldn’t you rather let someone who DOES have the experience and tools take help you? Doesn’t that seem like less of a headache?

Mr. Smith gives even more good advice:

Choosing the right credit repair firm is an exercise in common sense. Like mechanics there are good ones and there are bad ones. Absolutely stay away from companies that promise pie in the sky offers. Credit repair is not accomplished overnight but is rather an ongoing project over months. When evaluating firms consider their experience, time in business, affordability, cancellation and refund policies.

While choosing a good credit repair service is, indeed, “an exercise in common sense,” it can still be difficult because of all the options. And, like choosing a mechanic, if you get stuck with a bad credit repair service, you risk having more harm done than good.

When Mr. Smith talks about “pie in the sky offers,” he may as well be talking about guarantees. The reason is, there are no guarantees when it comes to repairing credit. If any credit repair service tells you different, then keep searching.

The first reason for this is that, according to the Credit Repair Organization Act, it’s illegal. You simply cannot make that guarantee.

Furthermore, no credit repair service can be sure how their client is going to behave, or what kind of unique credit situation they might be in. If a company guarantees to raise your credit score, but all the while you refuse to pay your bills, we CAN guarantee your score will not go up.

Also, no credit repair service and, in fact, nobody at all, can take legitimate negatives off your credit report.

At Veracity, we are dedicated to doing everything in our ability to get erroneous information removed from your credit report. We also counsel you on credit maintenance and prepare you with plan of action, most of which (aside from pulling your credit report) we will put in motion.

Coinciding with Mr. Smith’s wise advice, we also recommend that our clients remember: credit repair does not happen overnight. It can be a fairly lengthy process that takes patience and determination. Veracity can help keep you motivated and determined during the process, though.

As far as Veracity goes:

Our costs are comparable to any credit repair service, with an affordable one-time membership and low monthly payments, and our clients have the right to cancel at any time, with no additional charges.

At Veracity, we aim to help you be happy with your credit. And we believe, if you join now, we can do just that.

Your Rights Regarding Collections Agencies

Boy has this little article coming from Channel 9 WMUR in Concord, N.H. ever created a stir:

http://www.wmur.com/news/19811693/detail.html

It seems that the Fair Debt Collections Practices Act is finally leading state judicial systems, and therefore collectors themselves, to take heed to law when it comes to collecting outstanding debt.

Here at Veracity, we do not condone avoiding your bills. As we’ve always said, the best way of keeping your credit in good standing is to pay all your bills and pay them on time. However, things come up and this is sometimes easier said than done. When, or if, you find yourself on the other side of a collections account, remember that they have rules to follow, too.

In the case of Ms. Rosemary Gilroy in New Hampshire, she was able to sue the collection agency for repeated and harassing phone calls. This is just one of the rights you have that protects you from questionable, abusive, deceptive and unfair collection practices.

There are also laws in place that regulate and prevent the following:

  • When, where and how collection agencies acquire personal information, including location or address
  • When, where and how they contact the consumer, or anyone associated with the consumer (i.e. friends, family, cosigners)
  • Harassment or abuse
  • False or misleading representation
  • False or misleading paperwork
  • Debt validation policies and procedures

You can access the entire act yourself at:

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

The above link is also useful in contacting the necessary people if you feel that the collection agency you’re dealing with has violated any of these policies. Also, you can check the laws of your specific state online, for instance the Colorado Attorney General’s website is located at:

http://www.ago.state.co.us/consumer_protection.cfmMenuPage=True.html

At Veracity, we understand that things don’t always work out the way you want. But even if you’ve found yourself in a financial hole, it’s important that you know you have rights and that you arm yourself with them, so that you may be treated fairly as you attempt to put your credit life back in order. Don’t be bullied by collection agencies; know your consumer rights and use them!

If you have any further questions about your consumer rights, call Veracity at 1.800.518.2194.

Do-it-yourself credit repair may save money, but it may cost a long-term headache

We stumbled upon this well-written article by Steve Bucci in the Norristown Times Herald:

http://www.timesherald.com/articles/2009/06/13/business/doc4a332e1b2eefe583582354.txt

Everything that Mr. Bucci says about DIY credit repair is completely true: you can dispute information on your credit report and have it taken off; and you can get a free copy of your credit report from AnnualCreditReport.com.

However, we feel the need to expand on Mr. Bucci’s summary of credit repair. First of all, if credit repair were truly that easy, wouldn’t everybody be doing it themselves? The fact is, the tools are there for anybody to repair their own credit. It just so happens that results are often hard to gather and difficult to decipher. That’s where experts such as the ones at Veracity Credit Consultants have an advantage.

Not only is credit repair time-consuming and tedious, it is also easy to get off track. Credit bureaus and creditors have, by law, 30 days to respond to a dispute. Even then, there’s not guarantee you’ll get the response you were looking for, and more disputes may have to follow. At Veracity, we take on the dispute process for you and you are able to track the results online.

Again, Mr. Bucci is correct in his assessment of credit repair. However, he may assume that the reader has more time on their hands than they actually do. If you are seeking credit repair without having to sort through countless creditors and mail countless letters, well then Veracity or any other accredited credit repair service may be for you.

In the end, though, we at Veracity agree entirely with Mr. Bucci’s ultimate synopsis on credit repair and maintenance:

Keep in mind, going forward, that making all your credit payments on time, and as agreed, is the best and cheapest way to avoid bad credit and to ensure that your credit report and score improve.

Now THAT is some advice that Veracity couldn’t agree with more!

The Path To Better Credit Scores

We recently came across an interesting article at Nurido News. We are not linking to it here because the article provides advice that the experts at Veracity Credit Consultants do not, and will not, endorse.

You see, it starts out on the right path with this truism…

I cannot promise that [credit repair] will be easy…

That’s absolutely right. No matter whether you decided to repair your credit yourself, or make use of a service like Veracity, credit repair requires work. Services like ours can help speed up the process and guide you toward the right path, but even full service firms like Veracity require that you forward letters and keep updated with fresh credit reports.

It’s at this point the article takes a turn for the worse…

The first step is to stop making any payments on your credit cards.

This is something that Veracity never, ever recommends. Paying your bills on time is the absolute best way to ensure good credit for yourself, and no credit repair strategy, whether DIY or paid for, can remove legitimate negative information from your credit report.

To learn more about DIY credit repair, check out our FAQs.

Credit Scores Changing

Via the FatWallet.com forums, we’ve found this credit-related question:

I just pulled my CreditKarma score.
Yesterday it was 752.
Today it is 731.

Has this happened to anyone else today? Or did CK change their formula?

I am back to studying my TU report. Maybe I overlooked something?

As mentioned in the Veracity FAQs, your credit score can fluctuate on a daily basis because of several factors. In this case, the poster mentioned that he does have a credit card whose balance fluctuates between $800 and $4,000 each month. Although he doesn’t mention the limit on the card it is likely that this difference in balance could cause a deviation of a few points in a credit score.

This shift could also depend on when the credit card company makes their report to the credit bureaus. If they happen to report in the middle of the month when this poster’s balance is highest, he may find himself with a small ding to his credit.

In addition, unless your credit report specifies that you are getting a true FICO score, the score will depend on the algorithm that the credit report company uses to approximate the FICO score, and it could depend on factors that would otherwise not affect your FICO.

How Much Money Do I Really Need To Buy A House?

I recently created this info for an FHA loan scenario for a new first time home buyer when he asked how much money he would need to buy a home:

1. Ask the Realtor for the house and condo prices available for your requested area and size needs.

2. You will want to have a minimum of 3.5% of the purchase price of the house available for the down payment in addition to another 3-5% in closing costs. The seller can “make a concession” to pay all or part of the closing costs portion (up to 6%) if they are able and are negotiated to do so by your Realtor.

3. The down payment/closing costs comes from your normal checking and/or savings accounts (or CDs or possibly even stock accounts or retirement accounts if permissible by the account type) and you want to be sure there are no unusually larger deposits that immediately (within 60 days of closing) show up in your regular accounts during this process.

4. The down payment/closing costs can also be a gift from an immediate family member and must be able to be documented already in the gift donor’s account…and not a loan (can be an equity account, stocks/bonds account, checking/savings etc…but not borrowed at all).

5. Ask the Realtor if there are any community programs that still have funds left for first time buyers and what the amounts are and the income requirements if you qualify…and if they are like a loan and will have a monthly payment amount to them…and if they can be used for both the down payment requirement and the closing costs (many first time buyer community programs are either now gone or no longer have funds available).

6. Be sure your credit reports and qualifying FICO are in acceptable order. Though you might easily qualify for an FHA backed loan with lower than “normal” FICO scores, the *best* interest rates go to those with credit scores now of 740 or better!

For a $300,000 purchase:

1. Down payment of $10,500

2. Approximate closing costs will vary depending on the date you close, the title costs for your area, the property taxes/homeowner insurance actual amounts, if you need any discount points to lower your monthly payment (if available)….but approx: $9,000-$11,000.

Total cash to close: $21,500 more or less

3. Monthly payment approx: $2300 as follows:

a. Principle/Interest at 6.5%: $1862
b. Homeowners insurance if about $1080 a year: $90
c. Property tax if $2600 a year: $217
d. FHA mortgage insurance premium: $135
e. (There could also be a monthly association fee for a condo or development area HOA: $40-$250 or more per month added to the above monthly “escrowed” amount)

4. For this amount of monthly payment, you need to show about $4700-$4900 or more a month gross income (income before taxes are taken out) and AFTER subtracting any credit report liabilities (truck payment, credit card payments, loans payments, etc.)

You can have a co-borrower on the loan…even a non-occupying co-borrower. If you do, they should also have an ok FICO score, low amount of debt and a regular W-2 type job or documented retirement income (self-employed income can be more difficult to qualify right now).

5. Your bank account and non-deposited gifts should be at least the $20,000 or more for the down and closing…more is better and you don’t want to be cash poor at the end. Again, the seller can be negotiated to pay the closing costs part..about half of it, so you would need only about $11,000 in your accounts if using the seller for some of this…but also best to have a couple of months of payments left over in your accounts after closing: about $5000 more or so with a $300,000 purchase. ($16,000 to $27,000 in your accounts all told).

6. You will use some of that $10,500 down payment as earnest money when you make an offer so you will want some of those funds already in an account to use for that…usually $1000-$4000. And you will want $250 – $300 available to pay for a home inspection after your offer is accepted.

7. You will also need $350-$500 to pay upfront for an appraisal valuation on the selling price of the home once the inspection is completed to your satisfaction (the mortgage company will often collect a check or credit card deposit from you for the appraisal amount during the loan application process)… this can be refunded at closing by the seller if agreed by them.

Hope this helps in your planning. Keep saving, document any large deposits, and try not to charge anything else of significance on your credit cards before you are finished buying the home…and get help for the down payment/closing costs and larger monthly home expense payment if needed.

Eileen M. Carda is a licensed, fully bonded and Colorado compliant Mortgage Professional with America’s Mortgage, LLC. You can contact her at 303-903-0394 or visit www.eileencarda.com.

When Is The Right TIme To Refinance?

Your current interest rate is 6.25% and you have heard that rates might get as low as 4.5%. Does it make sense to refinance now or should you wait until interest rates drop again? The truth is, there is no “golden rule” that applies to everyone but in this market there are some general rules of the road.

Know the NEW Rules: It used to be that if you could fog a mirror, you could get a loan. The rules have changed quit a bit and the loan you may have used to finance the purchase of your home may no longer be available. If you used a low or no money down loan to purchase your home this can impact the rate that you are eligible for based on the programs that are now available. Working with someone who can help you understand the new rules and how they impact you is now more important than ever.

Know your target interest rate: A target rate helps you determine when it is the right time to refinance. Your target rate is a benchmark rate that establishes your minimum monthly payment savings necessary to make up the cost of a refinance within 16 months. Usually it starts to make sense considering a refinance when market interest rates are 1-1.25% lower than your current rate. Once you determine your target rate your mortgage professional will make sure you don’t miss it when rates drop.

Know the value of your home: Some areas of the Front Range have seen their home values decline. You need to get an idea of what the accurate value of your home is to see if you are eligible to refinance. Many people try to use websites like Zillow to research the value of their home. Those people make assumptions about the value of their home based on the information that they find and don’t find out until later when they are in the process of a refinance that their information was wrong. Work with a good, local real estate or mortgage professional in order to help you determine the value of your home because they are going to be the most familiar with local real estate trends in your area or subdivision.

Bill Rodriguez is a Certified Mortgage Planning Specialist with Cherry Creek Mortgage and part of the HomeWISE Team. The focus of the HomeWISE Team is to help their clients build and maintain their Wealth through Real Estate and to provide Investment Strategies and Education for the Mortgage industry. Contact Bill today at 303-877-6323 or go to www.DenverHomeWise.com

The Potential Role of Value Investing In Volatile Markets

The inclusion of stocks in a portfolio is essential to pursuing most financial goals, because stocks historically have outperformed all types of bonds and cash alternatives over the long term, and their higher returns help combat inflation.[1] Sharp price swings in stocks that can arise due to market volatility, however, can cause even some of the most disciplined investors to turn jittery and unload their portfolios. In a turbulent market environment, suitable investors looking for the capital appreciation potential that stocks provide – with a lower level of volatility than other types of stocks – often find value stocks appealing.

Value stocks are those that are perceived to be “bargains” or are undervalued – that is, those whose true values are not reflected in their current prices and, over time, whose prices are estimated by value managers to potentially increase faster than stocks that are fully priced. Value stocks may be inexpensive or “cheap” compared to what they are currently worth. The market is not willing to pay more for them because their underlying companies or industries are out of favor. The job of value investment managers is to identify companies poised for a possible turnaround, potentially leading to rising earnings and opportunities for higher stock prices.

Before an investment manager identifies a value stock as a “buy,” they need to determine if a positive change has occurred in the underlying company that is yet to materialize in the stock’s current price. Positive changes include:

· an aggressive management change or significant productivity improvements;

· a restructuring to reduce costs, which would make the company more likely to continue pursuing profitability over the long term; and

· financial conditions that they believe are strong or improving.

Value managers generally use a “buy and hold” strategy. This means that a stock will be held until it meets its target price (of course, there is no assurance that target prices will be attained), and in some cases, even longer if the underlying company demonstrates the potential for continued profitability. Value managers will sell stocks that appear overvalued or have experienced deteriorating fundamentals.

Large company value stocks typically are more attractive than small company value stocks during times of market volatility because these stocks are often from companies that are established market or industry leaders. They therefore generally withstand market setbacks better than small cap stocks and experience smaller price swings during market volatility.

Of course, like all stocks, large company value stocks are subject to market risk and will undergo fluctuations in stock prices; downward (as well as upward) trends can occur over short or extended periods.

Dividends Can Potentially Add a Level of Protection in Turbulent Times

In addition to capital appreciation, value stocks typically pay investors a steady stream of income through dividends, although dividends are not guaranteed. Dividends provide:

· Cash Return to the Investor – Dividends are a major reason to invest in stocks at any point in the stock market cycle. Stocks that pay attractive dividends are appealing because they offer the potential for above-average growth of investment capital and steady income.

· Downside “Cushion” – High current dividend yields of underlying companies can serve as a “cushion” for companies’ share prices if they temporarily fall out of favor with the market. This plays an even more important role in volatile or declining markets.

· Favorable Tax Treatment – The Tax Increase Prevention and Reconciliation Act of 2006 extends favorable capital gains tax rates to certain dividends. Through 2010, those investors in the 25 percent or higher tax bracket pay 15 percent on qualified dividend income, instead of the investor’s ordinary income tax rate.[2]

Value Stocks in Your Overall Investment Plan

Value stocks are especially appealing in turbulent times because they tend to be more defensive than other equity styles. That is why many conservative investors, investors nearing retirement and first-time stock investors have found them so attractive. They enable investors to participate in the potentially larger gains associated with stocks while helping to manage risk in a diversified portfolio.

Value stocks can play an important role in an investor’s portfolio. Selecting those stocks appropriate for your investment plan, however, is a demanding process that requires the inclination and time to analyze companies, study the forces that influence the economy, and assess the trends in the financial markets. In volatile markets, this challenge can prove even more daunting.

A professional investment management program may be an appropriate strategy for building a portfolio of value stocks. Your financial advisor can help you determine if investing in value stocks through separately managed accounts is suitable for your specific situation, in light of your risk tolerance, investment objectives, and liquidity needs. For more information about how you can diversify your portfolio with value stocks, and information about other defensive investment strategies that may be appropriate in a volatile market environment, please contact your financial advisor.

The information contained in this article is based on sources believed reliable, but its accuracy cannot be guaranteed. This article is for informational and educational purposes only and should not be relied upon as the basis for an investment decision. Consult your financial advisor, as well as your tax and/or legal advisors regarding your personal circumstances before making investment decisions.

Did You ATM Your House?

Lots of people are asking how we got here. Here IS: Home prices worth less than they were 2 years ago.

The common thought is that housing prices will “always go up.” While today many will say ‘bahumbug’ to this, it is actually true that over the past 2 decades, home prices nationally have increased over 240%… does that mean that every year every market goes up? The answer to that is: NOPE. Real Estate has always been, and will always be a “local market.”

The ATM reference here is how we got here. Did you do a refi of your house over the past 5 years? Many people did. Many people used the “up market” to get cash out to pay their other obligations down… and then found themselves charging those cards and credit lines back up… that’s how we got here… many people borrowed more than was sensible, just because they could… and they sucked up all the equity in their house’s value… The banks loaned it to you, without helping you consider that there were costs associated with selling a house… now with no equity, and a house full of TVs, stereos, sports gear and a new car in the driveway, the average american doesn’t have the equity in their house necessary to even sell their house at today’s prices.

This is how we got here… rampant consumerism, and unbridled lending.

Understanding Mortgage Loss Mitigation or the ‘Short Refinance’ Process

In brief, loss mitigation is the process of getting the amount of the mortgage(s) in line with the value of the property; and at the same time, getting the interest rate(s) in line with the current market. The goal is to keep the home owner in the home. Loss mitigation, done correctly, helps stabilize neighborhoods and values within neighborhoods. Additionally, loss mitigation cuts the losses incurred by the mortgage servicing company and the investor. Finally, loss mitigation reduces the expense of corporate advances and holds intact servicing fees.

Home owners may be exposed to many financial pitfalls and dangers. For example, a potential deficiency judgment must be negotiated to be forgiven. Between now and the end of 2009, by Federal Law, there can be no income taxable event on a forgiven deficiency or deficiencies. More discussion and facts are available on our web site (below).

Credit Agreement

Whenever you apply for credit you’re provided with a credit agreement. Be it credit hire agreements or regulated credit agreements you are obligated to sign a written contract which stipulates the terms and conditions of that credit agreement. In addition to knowing about credit agreements you must also become familiar with unfair credit agreements. This means being clear on information the consumer is privy to upon establishing the credit arrangements and before signing the agreement. In many cases this means shopping around for better credit deals based on comparison of credit agreement terms and conditions. Before signing any credit agreement however make sure to consider these key factors about credit agreement:

  1. All credit agreements must comply with the 1974 Consumer Credit Act to include recent amendments added in 2006. This includes adherence to regulations regarding promotional offers, pre-approval or contract information and credit agreements. Overall the credit agreement must completely comply with regulations regarding unfair credit agreements.
  2. The creditor has to make clear pertinent financial information on the credit agreement to include, the total amount of credit, the period of time for the credit, total amount payable including APR rates. Additionally, the financial information must also illustrate the rate of interest, late fees, and any other charges payable in the event of a default or early pay off.
  3. The credit agreement must clearly point out the cooling off period and the process for the credit agreement cancellation or trade. This includes any type of credit agreement, be it in home, over the phone or on the internet. In either case the cooling off period will vary from based on different types of transactions.
  4. If the credit account is established in house with the creditor, the consumer will not be extended a cooling off period however they will receive a copy of the agreement within 7 days before it’s signed and an additional 7 days to sign and return.
  5. The creditor has to allow the consumer to access to their agreement or copy thereof upon the consumers request. This mean a consumer can request a copy of their signed agreement anytime they choose.
  6. Credit agreements must accompany regular monthly statements to the consumer and notice when payments are late or missed calculated with any penalties or default fees plus interest should be present.
  7. There should be consumer information regarding the early payoff and balance settlements pre-calculated based upon the credit agreement terms.
  8. Default and termination enforcement information should be sent to the consumer and disclosed all enforceable rules, to include legal actions should certain terms or conditions of the contract be violated by the consumer. However be advised this may not apply to credit agreements enter into before April 2006.

Build Your Credit with a
    Secured Credit Card

With a secured credit card, you can:

  • Use it wherever major cards are accepted
  • Make purchases online or over the phone
  • Establish a secured line of credit that will help increase your credit score

Learn More

Get a FREE Credit Consultation.

Call 1-866-518-2194 or click here.

(Se habla espanol)