Wow! Renting vs. Buying - Credit Law Center

Wow! With The Cost of Rent Rising Have You Thought About Buying?

Wow! With the cost of rent rising have you ever thought about buying a home? It is important to weigh the pros and cons of renting vs buying. Credit scores are a factor in buying a home, but there are many different programs for future home buyers can help them get approved for a loan.

According to a recent report by Zumper National Rent Index, the average rental payment for a one bedroom apartment is $1,143, and for a two bedroom apartment $1,358.With the cost of rent rising on average from .4 to .7% for the third month in a row, have you ever weighed the benefits of owning a home?

Rent vs. Buying – Questions to ask yourself

Renting vs. Buying is a huge debate for many, whether you are single, have a family or you a single parent family. Some things you may want to consider are….

  1. How long will you stay in the home? Purchasing a home is a great way to gain equity, building equity isn’t an overnight process. It does require you to stay in the home at least on average of 5 plus years.
  2. Will you be able to handle the home repairs? Home-ownership comes with a lot of responsibilities, and one of them is the up keep of the home. Make sure you are prepared to maintain the property and anything that may break.
  3. If you decide to remain renting, how much will your rent increase over the next few years? With the average cost of rent continuing to rise each year, it may be good to keep in mind this may continue.
  4. What is my Credit Score, and will I qualify for a good interest rate? A good credit score is important when trying to get the best interest rate possible.

Home Ownership

Owning a home can come with lots of advantages and disadvantages. Some major advantages are earning equity, belonging to a community, tax benefits, and the ability to decorate the home to your desire. It is always a good idea to weigh the pros and cons before jumping right in.

 

Renting

Just like owning a home, renting has some great advantages too. If you are unsure where you want to find a permanent residence renting is always a good choice, renting is great for those who don’t want to do the upkeep on a home, if you are financially secure in your job, or just not quite ready to take the financial burden of taxes, mortgage insurance.

It is important to know if home ownership is your American Dream, but you feel your credit just isn’t where it needs to be.  According to the most recent FTC report 79% of all credit reports contain errors, be sure to review your reports, stay update and active, and don’t hesitate to reach out to a professional for help.

 

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Debt Collectors and Divorce Decree

Debt Collectors Do Not Care About Your Divorce Decree. – Credit Law Center

A divorce decree is the final courts ruling or judgment in the termination of marriage. In this final judgment, the two parties will divide properties, determine spousal/child support and divide financial debt. Something that is brought up a lot in regards to credit reports and debt collections is, my spouse was supposed to pay that debt according to our divorce decree. Yes, your spouse may have been deemed responsible for paying this debt; however, the credit card companies or other financial institutions do not follow the divorce decree

Why do financial institutions not abide by the divorce decrees?

A financial institution only follows the legal binding contract you signed with their organization, so if you and your ex-spouse signed a joint account with their company, you would both be held responsible for the account. It is a good idea that you and your ex-spouse try and pay off any debt before filing for divorce.

It is important to remember that even if your spouse is deemed responsible for paying A, B and C debt in the divorce, and if they do not pay they will come after you and any missed payments will harm your credit and possibly cause the creditors to file judgments.

The debt you are unaware of.

Some states are community property states, and you could be held responsible for the debt that your spouse incurred, even if you are unaware of and did not sign a contract with. Community property states consider marital debt – joint debt.

Things to Consider.

Add an Indemnity clause to your divorce decree in cause you have to pay for his or her portion of the debt to protect your credit rating. The Indemnity clause will allow you to take him or her back to court to allow you to sue for reimbursement.

Make sure you are aware of all debt that is on both reports when filing for divorce if you live in a community property state.

Try and pay off as much debt as possible, before filing for divorce.

Make sure any house or car loans are refinanced in one name so that both names are not on them.

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Credit Law Center- Mortgage Pre-Approval

Mortgage Pre-Approval Process – Credit Law Center


If you want to purchase a home the best possible way to guarantee you are on the right track is to see a mortgage lender.  A lender will be able to help you in the pre-approval process. The pre-approval is a promise from the bank that you are qualified to borrow up to a certain amount at a particular interest rate.

What is the Pre-Approval?

Pre-Approval means the lender is confident that you will be able to provide the down payment and your financial statements you have provided show that you will be able to cover the mortgage payments on the specified loan amount. The only contingency left is that the home you choose must meet the appraisal price.

What you will need for Mortgage Pre-Approval

  1.  A Good Credit Score – Most lenders require a credit score of 620 or above. The higher the credit score, the lower the interest rate, the lower the score, the higher the interest rate. Some lenders may refer you to a credit repair company to help you review your credit file to remove inaccurate or derogatory items.
  2.  Proof of Income – All borrowers will need to provide W-2 statements from the last two years, recent pay stubs that show income and any evidence of any additional revenue or assets.
  3.  Employment Verification – The lender will want to see your most current pay stubs and verify your employment. They may also want to speak with your employer. If the same employer hasn’t employed you in the last two years, they may want to talk with the previous employer.
  4.  Proof of Assets – The mortgage lender will want to see your most recent bank statements and any investments that you may have. These items will prove that you have the funds to cover the down payment or the closing costs. If you are receiving any money from a family member or friend to cover the down payment, you will need to make sure you have a gift letter.

It is important during the pre-approval and loan process that you do not change jobs, take money from any that you can not explain, apply from credit cards or make any large purchases

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Credit Law Center Medical Debt

Medical Debt and Credit Reporting – Credit Law Center

With social media so present in our lives now we see the amount of GoFundMe pages for medical bills, it is validating the statistics.  According to a recent report, by the CFPB 43 million Americans have overdue medical debt on their credit reports. Approximately 2 million Americans are affected annually by medical debt and remains the leading cause of personal bankruptcy. Medical debt can stem from a routine medical examine being billed improperly to the insurance company, a tragic accident or a sudden illness.

Medical Debt and Third-Party Collections.

Hospitals and doctor’s offices do not have an active association with the credit bureaus. However, they do have a relationship with third-party debt collectors. Third-party debt collectors do have a connection with credit bureaus, and they will report the negative items to the bureaus. Every medical facility has their set of rules and regulations on how long they will keep a debt before they transfer it to the third-party debt collector. Some medical facilities may move it one day after the due date and others it may be after 60 days past due.

Medical And Credit Scores

When a negative collection item hits the consumer’s report, it may drastically lower your credit score. Having one medical debt on a credit report can lower your score anywhere from 50 to 100 points. There are two different scoring models used, FICO and VantageScore. FICO and VantageScore may be utilized for various reasons, and there are several different variations of both, each industry may use a different version to determine your credit score. For example, the FICO 8, the most commonly used when applying for a loan or a new job until recently, as they just started using the FICO 9. The significant difference between FICO 8 and FICO 9 is that FICO 8 does not separate medical debt from other unpaid debt, so if a lender is using a FICO 9 your score has the potential of being a few points higher.

Things to do to avoid medical debt

The best possible scenario is to pay all bills on time on the due date, in some cases, you may be paying them before the insurance has paid, and the medical facility may reimburse you. That will avoid collections on your report. It is always good advice to know your healthcare plan and understand what your co-pays are as well as your co-insurance, make sure to be familiar with your Explanation-of-Benefits. Being familiar, with your healthcare benefits and knowing what your responsibilities are, and paying the co-pays and coinsurance in advance will help will collections items later. You may always call the healthcare plan and ask them to go over the benefits with you, and you may also ask the medical provider for an itemized statement. Don’t ever be afraid to verify the have billed you correctly.  Last but not least call to make arrangements, you may try this first with the provider or if it has been transferred try working with the collection agency before it is sent to a credit bureau.

 

 

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Teaching Credit and Money to Our Children

Teaching Credit and Money to Our Children – Credit Law Center

From the day we bring home our children from the hospital all we want to be the best at guiding them and teaching them. It’s a no brainer we will be the one teaching them to tie their shoes, brush their teeth, and most of us will be that one parent waiting up for them until curfew. Did you ever think of how important it would be to teach them about credit scores and cards?

Honestly, I can say I didn’t realize I would be worthy of teaching them! After a failed marriage and adjusting to the daily financial struggles of being a one income single parent family, I finally feel I have the knowledge to teach about credit. Recently my teen daughters had a discussion about my job and the importance of Credit, to my amazement they knew more than I imagined.

As a rule, children are like sponges, they sit back and observe their parents daily as they deal with finances, they witness the emotional effects money can have on their parents. This explains why my girls knew so much. My children have watched me go from the bottom not owning a home, not financing a car, having past due utilities to finally succeeding.

In addition to our daily interactions, there is some key some key tips to help guide them into being financially stable adults.

Set the Example

Your kids are already watching and sensing your emotions when it comes to finances, it never hurts to have open communication with them. Explain to them why you want to save your money, instead of the fancy vacation or the shiny new car. Children will pick up their habits from you, it is natural for them to be products of their environment. If we want to make them financially productive adults, we should do our best to show them we are as well.

Tell Your Kids No and Make them Earn it

As a parent we all know that children can be demanding at times and want unecessary items, however telling them no is an important lesson. This could be a hard lesson as we live in a society with so much instant gratification, however making them save thier allowances, birthday money or even do extra chores to reach obtain the item is teaching them to be self-sufficient.  As the child gets older encourage them to seek out other opportunities to earn money for them, like babysitting, mowing lawns, or tutoring.

Teach them about Cash

Teach them the value of cash and to keep it safe. Younger children you may want to keep it in a bank at home and count it regularly, so they will value the dollar amount and see it as a tangible item. The older they get you may want to start a children’s share account at the bank or credit union you bank at, this will also teach them about interest and the value of saving.

Never overextend or forgive a loan

If you loan your child money it is important to never loan them more than they can pay you back, just like credit limits over extending sets them up for failure. Keep their goals realistic for their financial means. Create a contract, make them sign it and stick with it, include interest, late fees, find creative ways to make it fun for them.

 

As Children mature there are many different financial institutions that have programs that encourage and help parents and caregivers raise financially stable adults. The CFPB has a Money as You Grow book club for children ages 4 to 10, to help assist families to learn key money concepts by reading, play, and quiet one-on-one talks. They also have a great chart on the ages kids develop different money skills.

 

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PRIVATE DEBT COLLECTOR

IRS Now Using Private Debt Collector to Collect Unpaid Tax Debt

The IRS just made it harder to tell if you are getting scammed. Prior to April of 2017, getting a call from someone claiming you owed money to the IRS, you could have bet on it being a scam. As of April 2017 the IRS began using  private debt collectors to collect on certain overdue federal tax debts. Taxpayers with an IRS debt that is more than two years old may be hearing from the IRS about their tax account being transferred to a private debt collector. These debt collectors will be working on accounts where the IRS has previously attempted to collect the debt and is no longer currently working the account.

IRS and Private Debt Collector Plan

The IRS will send the taxpayer and their representative a written notice that the account has been transferred to the private debt collector. The private agency will send a second letter to the taxpayer and their representative confirming the transfer. Both letters will include the taxpayers name, amount owed and the authentication code. The IRS has contracted four separate private debt collection agencies to assist with this process: CBE, ConServe, Performant, and Pioneer. These private collection agencies all will be able to  identify themselves and must follow the the provisions of the Fair Debt Collections Practices Act and must be courteous and respect taxpayer rights.

How to Tell you are dealing with a Real Private Debt Collector

The private collection agency working with the IRS will never ask you to pay them directly by using a check, debit or credit card. They will suggest you pay electronically at IRS.gov/payments, or mail a check directly to the IRS.

The debt Collector working with the IRS will never use robocalls or prerecorded messages, therefore it will always be a live representative.

The representative will always use the authentication number that is referenced in your letters.

If you are unsure if you have a balance owed, you may check your balance at IRS.gov/balancedue

 

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Single Parent Home Ownership. Credit Law Center

Single Parent Home Ownership – Credit Law Center

A Single parent balances work, children and finances daily, this doesn’t stop most single parent households from  the desire to purchase a home. Home ownership to many single parent families represents the ability to achieve self-sufficiency and economic independence, to other single parent households it is a way to provide a stable, engaged environment for their children. It may seem like a greater task for a single parent to obtain home ownership, but with the correct approach it can be done.

In 2012 I suddenly found myself in debt, behind on every bill I had and at the end of my 11 year marriage. If being a  single parent wasn’t costly enough I was a parent to a special needs child, which roughly cost me $5,000 in medication per year. I had no idea how I was going to survive being a single parent with one income. We had just signed a 2 year lease on a home that was $1095 a month! I was stuck in this lease, so I had no choice but to call my landlord and come up with a plan, she graciously reduced my rent to $800 a month for a few months. I created a monthly budget, sold every piece of gold I had and got caught up on all my household bills. Staying on my budget and making sure I didn’t pay my bills late was a key factor.

Over the next year I signed up for a monthly credit monitoring system and watched my credit scores closely. Having a special needs child and extensive medical treatment for him caused me to have numerous medical collections on my report. I tried disputing every medical collection on my own and had minimal success, if I only would have known about Credit Law Center then. The biggest factor in my credit scores was I didn’t have anything positive reporting. The first tax refund I received as a single parent was a significant amount, instead of going out and blowing all the money, I went and got a secured loan from my bank. I faithfully paid on time each month and never missed a payment. After about 6 months of paying I felt secure enough to apply for a credit card. I was instantly approved and afraid to use it! I knew I had to set limitations and not use it for things we didn’t need.

After 2 years of living on a budget and finding ways to make ends meet my lease was ending. I knew I wanted something a lot less expensive, but didn’t think I would qualify for a home loan based on my income. One day in January 2014, my best friend, who is a realtor, called and said she had a house for me to look at. Instantly, I told her there was no way I was getting approved. It took her several minutes  to encourage me to give it a try, I reluctantly took the name and number of the lender, and gave him a call.  I still remember the fear of being turned down like it was yesterday, within 3 hours of my initial call my fear turned to pure excitement. The lender gave me the OK to start looking at houses, it all happened so fast and seemed too good to be true. My credit wasn’t perfect, but it was decent enough to get approved for a USDA loan.

That evening we went and looked at the house, as entered the house I knew immediately the house was meant for us. We submitted our offer that evening and within hours they accepted our offer. On February 27, 2014, I closed on my very own house; as I signed the mortgage papers that day I realized anything is obtainable as long as you give it your all. Thankfully the USDA loan allowed me to purchase the home with out a down payment, as I was unable to save for one.

When I decided to write this blog I never expected to write it about my journey of becoming a single parent home owner. I had many trials and tribulations along the way, however I wouldn’t go back in time and change a thing. Being a single parent home owner is not always easy and it comes with lots of responsibility, however it comes with many wonderful benefits.  Home ownership has created a stable environment for my children, allowed us to belong to a community and allowed me to show my kids the importance of being self sufficient.

My story is like so many others that work at Credit Law Center, our employees love their job, and loves helping other’s dreams come true.

Steps to Take to Achieve Single Parent Home Ownership

1. Create a Budget

2. Do your best to pay all bills on-time to avoid late fees

3. Monitor your credit reports closely, make sure all items are reporting accurately.

4. Dispute items on your credit report that are not reporting correctly, seek out help from a professional.

5. Use any tax returns to help achieve positive credit, by getting a secured card or loan.

6. Research government grants and loans to help with the closing costs or other programs.

Helpful Resources

Credit Law Center has many different blogs and videos about the mortgage process and credit tips, a favorite is The Top 5 Credit Myths. This video explains what to look for on the credit report.

Credit Monitoring,  Secured Cards and more at Freecredithub.com

Mortgage Calculator

USDA Home Loan 

 

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Medical Debt &CollectionsCredit Law Center-2

Medical Debt and Collections -Credit Law Center

31 percent of Credit reports contain collection items, 67 percent of these collections are medical collections. Medical debt is often incurred as a result of an unexpected injury or illness, and a majority of medical debt happens to patients who are covered by insurance.

Medical Debts turning in to a Collection

The doctor’s office or hospital will handle the medical debt for about 90 days, after this the medical billing department will then turn the debt over to a third-party collection agency. A recent report from the Medical Billing Advocates of America states that over 80 percent of medical bills contain errors. These errors happen with just a simple billing error, or not being billed to the primary and or secondary insurance plan correctly.

A recent report from the CFPB, stated that consumers have made numerous complaints about patients not being notified of medical debt until they start receiving calls collection calls from a third-party collection company, furthermore the collection had already been reported to the credit bureaus.

Once a medical debt has been reported to the credit report it has the same affect on your credit score as a non-medical collection.

What to do if a Collection Item is reported?

If you start receiving phone calls or letters from third-party collection companies you will want to review your credit reports. Each bureau is required by law to allow you one free credit report every 12 months. Freeannualreport.com is a good opting use for obtaining your free reports, or if have already obtained them in the last 12 months you may choose a credit monitoring program like IdentityIQ.Com. Before go and pay off the debt it is important to review the report, verify that the collections are accurate, and verifiable. If the information reporting is incorrect, it may also be a good time to seek the advice from a law firm to start the credit repair process.

 

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Are Protecting Your Child's Identity-CreditLawCenter

Are You Protecting Your Child From Identity Theft? – Credit Law Center

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Can You Hear Me Credit Law Center

“Can You Hear Me?” FTC Warns of Scam – Credit Law Center

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