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Beware of Phantom Debt Collectors

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Beware of Phantom Debt Collectors

If you have ever been in the unfortunate situation of receiving a call from a debt collector, especially a third-party collection agency, then you are all too familiar with the stress and fear that such calls can introduce into your life. Obviously you will never find a consumer who enjoys receiving collection calls and many collection agencies are known for their unsavory collection tactics. However, in the spirit of fairness it is worth pointing out that sometimes legitimate collection agencies are vilified due to the actions of illegal or phantom debt collectors.

While not all collection agencies behave badly, there are many bad apples in the industry who do routinely use scare tactics and even illegal methods in an effort to collect outstanding debts. However, there is a brand of criminal debt collectors who are much worse. Phantom debt collectors, as these criminals are commonly called, are illegitimate "companies" who actually make up debts that were never really owed in the first place and try to frighten people into paying these phony debts.

How Phantom Debt Collectors Operate

Simply put, phantom debt collectors are scam artists - often very skilled scam artists. These scam artists will call unsuspecting consumers and try to convince them to pay debts which are not actually owed. Often these phantom collectors are armed with information acquired through identity theft so, even though they may reference an account which you recognize, the scam artist will try to convince you that the loan is due or that you owe more than your legitimate balance. Additionally, while all phantom debt collection scams are a little different, these scam artists will always try to convey a sense of urgency and will generally threaten serious consequences if you do not pay immediately via a credit card, debit card, or wire transfer. Obviously these practices are 100% illegal.

Recognizing the Difference

Unfortunately the phantom debt collection scam is probably not going away any time soon. In fact, the CFPB recently shut down a massive phantom debt collection scam which was utilizing robo-calling technology (enabling them to prey upon thousands of victims) in April of 2015. Due to the fact that phantom debt collection scams have become so common it is important to understand how to protect yourself from these would-be-predators. Here are 3 tips.

1.      Debt Verification
When a collection agent calls you regarding a debt that you are not sure whether or not you owe remember that you have the right under the Fair Debt Collection Practices Act (FDCPA) to request a verification of the debt. If the person on the phone refuses your request then the call is likely a scam.

2.      Call Your Creditor Back Directly
Received a call from someone claiming to represent a creditor with whom you do have a relationship? Remember you can always hang up and call the creditor back directly at the number on your statement to ensure that the person you were speaking with is truly affiliated with your creditor.

3.      Check Your Credit Reports
If someone calls you attempting to collect a debt that you do not recognize then pulling a copy of your 3 credit reports is a wise idea. You can pull your three reports for free each year at AnnualCreditReport.com or, if you have already accessed your free reports, you can always get a copy of your 3 reports + 3 scores online from a reputable credit monitoring service like those found here. When you pull your reports you should verify whether or not the account which was mentioned to you over the phone actually appears on your credit. If the account does not appear on any of your credit reports then the call could possibly be a scam. 

michelle-lambright-black-credit-expert

Michelle Black is an author and leading credit expert with over 13 years of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, budgeting, and identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here. 

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Did You Know that Some Items Remain On Your Credit Reports Forever?

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Did You Know that Some Items Remain On Your Credit Reports Forever?

You are probably familiar with the concept that most negative credit report items have an expiration date. There are very specific guidelines regarding credit reporting statutes of limitations which are spelled out in the Fair Credit Reporting Act (FCRA). Thankfully for consumers, most negative items on a credit report have to be removed somewhere between the 7 and the 10 year mark. (CLICK HERE to read How Long Will Items Stay On My Credit Report for a detailed list.)

However, there are a few items which do not have a credit reporting expiration date. Check out the list below of the types of items which are legally allowed to hang around and haunt your credit reports forever.

Unpaid Tax Liens

When you pay off an outstanding tax lien and the lien is released it is required to be removed from your credit reports after 7 years from the date of release. Better yet, if your lien is withdrawn then it can actually be removed from your credit reports immediately. CLICK HERE to learn how to remove paid federal tax liens from your credit reports.

Unpaid tax liens, unfortunately for the tax payer, can remain on your credit reports forever. Another frustrating fact regarding outstanding tax liens is that fact that these liens can make it impossible for you to qualify for a mortgage, regardless of how high your credit scores climb.  However, the good news regarding federal tax liens is that you may only need to set up an approved payment plan in order to be eligible for a withdrawal under the IRS Fresh Start Program. The credit reporting agencies - Equifax, TranUnion, and Experian - do not currently include withdrawn tax liens on credit reports. So, if you are granted a withdrawal then you can request for the lien to be removed from your credit.

Outstanding Federal Student Loans

The Fair Credit Reporting Act (FCRA) is actually silent on the subject of federally guaranteed student loans. Instead these government guaranteed loans are governed by the Higher Education Act. As a result, federal student loans which have gone into default do not follow the 7 year deletion rule which most other defaulted accounts must adhere to under the FCRA. In other words, defaulted student loans are legally allowed to remain on your credit reports indefinitely.

You Are Not Out of Options

If unpaid tax liens (especially federal liens) or defaulted student loans are plaguing your credit reports that does not mean that you condemned to spend the rest of your life in credit prison, never able to qualify for a loan again. On the contrary, several rehabilitation plans or payment options may be available to you to help you get these outstanding issues resolved and enable you to begin rebuilding your credit.

CLICK HERE or call 704-499-9696 to schedule a no-obligation credit analysis to review your 3 credit reports and discuss possible solutions for your specific credit problems.

Other Exceptions

1. When Borrowing Over $150,000.

If you are applying for a loan higher than $150,000 then, according to the FCRA, any item on your credit reports which was previously purged off due to the age of the item (i.e. older than 7 or 10 years) could actually be included on your credit reports again. For example, if you had a 20 year old foreclosure it could legally be included on your credit reports when applying for a loan in excess of $150,000.

2. When Applying for Certain Jobs.

Credit reports (not scores) are often used for employment screening purposes as well. If you are applying for a job with an annual salary of $75,000 or higher then credit reporting statutes of limitation under the FCRA are suspended as well. As a result, previously purged credit report items could legally be allowed to show up on your credit reports.

3. Insurance Screening.

The final exception to the 7-10 year credit reporting rule can come into play when you apply for a life insurance policy valued at $150,000 or higher. Should a credit reporting agency choose to provide an insurance provider a more extensive view of your past credit history, including those items which have aged off of your standard credit reports, then they have the legal right to do so.

The Catch

Although in the case of the 3 exceptions above the credit reporting agencies are allowed to include information which would be outdated on a standard credit report, they are probably not going to choose to do so. In fact, it would be extremely unusual for a previously aged off account to reappear on your credit reports even if one of these specific exceptions applied to your situation. 

Michelle Black is an author and leading credit expert with over 13 years of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, and a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, budgeting, and identity theft. You can connect with Michelle on the HOPE4USA Facebook page by clicking here. 

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Why Consumers Don't Care about Credit

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Why Consumers Don't Care about Credit

As I was checking Google for credit related news this week, something that I do quite often as the admitted credit geek that I am, I came across an article about a new study that really bothered me. The study I am referring to was recently conducted by Bankrate and, among other things, it estimates that around 35% of US consumers have never reviewed their credit reports and over 26% of consumers have never even checked one of their credit scores.

As a credit expert I am constantly approached by consumers who are extremely concerned about their credit and want to learn more about how to improve their credit reports and scores to the highest level possible. So, I found it pretty disturbing that over 1/4 of consumers simply seem not to care about their credit at all.

Although disturbed by the study, I was not surprised by the fact that a large portion of US consumers are unconcerned about their credit reports and scores. After all, thanks to the Fair and Accurate Transactions Act (FACTA) passed in 2003, consumers have had the right to pull copies of all 3 of their credit reports for free annually via AnnualCreditReport.com. Yet only a mere 4% of these free reports are claimed on an annual basis.

There are many different reasons why consumers ignore their credit reports and scores. However, regardless of the reason ignoring your credit is a recipe for disaster - especially with the modern prevalence of data breaches. Here are 3 of the top reasons why consumers do not care about their credit as much as they should.

1. Failure to Understand the Responsibility

Of course you have the right to expect accurate and error-free credit reports. It is a right that is afforded to you under the Fair Credit Reporting Act (FCRA). Yet even though you have the right to expect accurate credit reports the fact of the matter is that errors and fraud occur on credit reports every single day. Mistakes on credit reports are quite common. In fact, the Federal Trade Commission released a study in 2013 which estimated there to be around 40 million mistakes on consumer credit reports. This means 1 in 5 consumers are victims of credit report errors.

While you do have the right to expect accurate credit, it is 100% up to YOU to monitor your credit reports for mistakes. When and if a mistake does arise then you have the right to dispute the mistake with the credit reporting agencies or even with the creditor or collection agency directly. However, if you are not in the habit of checking your credit reports routinely then you will never know when an problem occurs.

2. Bad Advice

The cash-and-carry crowd has many consumers convinced, especially young consumers, that living a life free from the shackles of credit is the only logical choice to make. However, the belief that credit scores, credit cards, loans, and mortgages are all part of an evil system designed to ensnare the unsuspecting masses is completely false.

Even if you decide to avoid credit cards, rent your home, and pay cash for vehicles it is still impossible to live a life which is unaffected by your credit reports and scores (unless you plan on going completely off the grid and living in a shack in the woods). Like it or not, your credit reports and scores impact many areas of your life including your insurance premiums, utility deposits, your ability to rent an apartment, your ability to rent a car, and even your ability to land a job. The sooner you admit to yourself how much your credit really matters the better off you will be. CLICK HERE to read "Why Credit Avoidance Is a Bad Strategy."

3. Mistaken Beliefs

Many people mistakenly believe the their credit only matters when they apply for a loan. However, only checking your credit reports and scores during a loan application is a giant mistake. First, if credit issues do arise during a loan application it is important to understand that it can often take months of hard work to resolve credit problems on your own or even with professional assistance. Second, only viewing your credit reports during a loan application is dangerous because it increases the probability of fraudulent accounts appearing on your credit reports without your knowledge.

How to Monitor Your Credit

Thankfully, monitoring your credit is not very difficult. You have the right to access a free credit report from each of the 3 credit bureaus individually annually via the website AnnualCreditReport.com. There are also many websites where you can access completely free credit scores (generally from one credit bureau at a time). CLICK HERE for a list of free credit score websites. Finally, you can sign up for an inexpensive, 3-bureau credit monitoring service to make the process of keeping tabs on your credit reports and scores consistently a breeze. CLICK HERE for a list of reputable, 3-bureau credit monitoring services.

michelle-lambright-black-credit-expert

Michelle Black is leading credit expert with over 13 years of experience, the credit blogger at HOPE4USA.com, a recognized credit expert on talk shows and podcasts nationwide, a contributor to the Wealth Section of Fort Mill Magazine, and  a regularly featured speaker at seminars up and down the East Coast. She is an expert on improving credit scores, budgeting, and identity theft. You can connect with Michelle on the HOPE Facebook page by clicking here. 

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