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Monthly Archives: June 2017

Creditors Measure Credit Rating

1. Capacity

The very first question is whether you have sufficient income to repay the debt. Creditors will definitely check to see if your income exceeds your expenses so that you ca comfortably pay the debt. A creditor will then want to know:

  • Your income – from all sources
  • Your fixed expenses
  • Your other debts

The amount remaining from your total net income, after deducting your fixed monthly expenses and other debts, is your capacity. If your net income is $3,000 a month and your total living expenses is $2,500, then your credit capacity is an amount that requires no more than $500 in monthly payments.

If you now pay $400 a month for other credit obligations, then your remaining capacity is a $100 a month, and a creditor should extend you that amount of credit.

There are three techniques that will allow you to maximize your income:

  • Increase your income
  • Decrease your expenses (easier to do than the first one)
  • Reduce your other debts

2. Collateral

A lender or creditor can be secured or unsecured. Secured lenders hold a lien against specific assets, such as real estate, an automobile, or boat. If you fail to pay, the secured lender can sell the pledged asset to recover debt owed. Secured lenders seldom loan more than the auction value of the collateral.

Secured credit, is an almost guaranteed way to rebuild your credit. Even with poor credit, a lender may advance your credit if you ca secure the credit with a lien against some valuable asset. Many creditors extend credit entirely on the strength of the pledged assets.

Other credit considerations are either ignored or carry comparatively little weight in the credit decision.

What can you use as a collateral to secure your debts and rebuild your credit? You may be appreciably wealthier than you think. Add the value of your various assets (property that you own) and subtract any existing mortgages or lies against those assets. The difference is your equity or net worth in the asset.

This is what you have available to secure a loan. Do not overlook any asset:

  • Home
  • Investment real estate
  • Stocks, bonds, mutual funds,
  • Automobile
  • Boats, planes, recreational vehicles
  • Notes and mortgages due you
  • Art, jewelry, antiques
  • Pensions, IRAs, and Keoghs
  • Royalty income
  • Income from trusts

You may have other assets to pledge. The point is that collateral gives you a borrowing power approximately equal to your equity in your assets. Regardless of your credit history, if you have collateral worth a solid $100,000, you should be able to borrow close to that amount.

Prevent Fraudulent Credit Card Transactions

AMEX, VISA, and MasterCard implemented a security feature known as “CVV2” and “CVC2”. These are the three-digit or four-digit numbers printed on the back side or front side (depending on card company) of the card (signature panel) to the far right. The three/four-digit code helps to validate that the cardholder has the card in his possession. You can include the code in your transaction processing and need to receive a match to successfully complete the transaction. If you are using a shopping cart for your hosting sign-up process, make sure that it is capable of collecting and processing these numbers. IMPORTANT: The ToS of the credit companies state that you are not allowed to store these numbers.

Use Address Verification Service (AVS) on all US transactions to verify the billing information provided in the order with what is on file with the card issuing bank. As a bare minimum, the zip code should successfully match before the transaction is approved and you hand out the account information. You should retain the response information for some time in case of a chargeback.

The possible AVS messages are:

Y – Exact match on street address and 5 or 9 digit zip code.

A – Address matches, zip code does not

Z – zip code matches, address does not

N – No match.

U – Address information is unavailable or Issuer does not support AVS. These transactions are only applicable for Visa and the merchant isn’t responsible for chargeback liability.

R – Issuer authorization system is unavailable, retry later

E – Error in address data – unable to complete check.

G – non-US Issuer not participating in AVS – Visa only. The error messages will vary from one provider to the next. Contact your provider for more information.

S – Address information is unavailable or Issuer does not support AVS – MasterCard only.

The most important warning sign of fraudulent transaction are international orders. It is very sad to be so generic with this statement but the percentage of having a fraudulent orders goes up immediately if the order comes from a non-US location. Be aware of cities or countries with high rates of fraudulent transactions. Malaysia, Indonesia, and most countries of the former Soviet Union tend to be source of many fraudulent orders.

The most effective way to help eliminate fraud or chargeback’s is to simply call the customer. A confirmation over the phone is most definitely advised for any large transactions. If you process a fraudulent transaction, not only do you lose the funds, but the product/service as well. A phone – even if it is international will save you a lot of hassle in the long run.

What if you find a transaction to be suspicious? Contact your authorization center and let them know you are concerned about the transaction. They will look at the transaction and may give you advice. You should also call the customer to request additional information (copy of drivers license or Passport as an example). Check the IP address of the sign-up and see where it is globally. Does it matches the customers address at least by country? Send a confirmation email to the customer verifying their order.

About Clean Credit Report

Getting Your Clean Credit Report

If you’ve been denied credit, insurance, or employment because of information supplied by a credit reporting agency, the FCRA says the company you applied to must give you the agency`s name, address, and telephone number. If you contact the agency for a copy of your report within 60 days of receiving a denial notice, the report is free. In addition, you’re entitled to one free copy of your report a year.

If you simply want a copy of your report, call each credit bureau listed since more than one agency may have a file on you, some with different information.

The three major national credit bureaus are:

Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111.

Experian (formerly TRW), P.O. Box 2002, Allen, TX 75013; (888) EXPERIAN (397-3742).

Trans Union, P.O. Box 1000, Chester, PA 19022; (800) 916-8800.

Correcting Errors For Clean Credit.

To protect all your rights under the law and to keep your credit clean contact both the CRA and the information provider.

First to get clean credit reports, tell the credit reporting agency in writing what information you believe is inaccurate. Include copies (please keep your originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request deletion or correction. Always keep copies of your dispute letter.

They must reinvestigate the items in question, usually within 30 days, unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file, then you will receive a clean credit report, with that item removed.

If your report contains erroneous information, the CRA must correct it(clean credit).

If an item is incomplete, the CRA must complete it. For example, if your file showed that you were late making payments ( 30 days or more), but failed to show that you were no longer delinquent, the CRA must show that you’re current.

If your file shows an account that belongs only to another person, the CRA must delete it.

When the reinvestigation is complete, they must give you the written results and a free copy of your clean credit report, if the dispute results in a change. If an item is changed or removed, they cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness.

Also, if you request, they must send notices of clean credit report corrections to anyone who received your report in the past six months. Job applicants can have a corrected copy of their clean credit report sent to anyone who received a copy during the past two years for employment purposes. If a reinvestigation does not resolve your dispute, ask the CRA to include your statement of the dispute in your file and in future reports.

Credit Scoring Works

Your credit score is a number that reflects on the likelihood at which you will pay back a loan. Scores range from 350 (high risk) to 950 (low risk). Credit scores do not take into consideration your income, how much savings you have or demographic factors such as gender, race or nationality. Your credit score is affected by your current debt level, your past delinquencies, your credit history and how many times your credit report is pulled up by various agencies. Your score considers both positive and negative information in your credit report. For instance, recorded late payments will lower your credit score while a good track record of making payments on time will raise your credit score. Timely payment of your bills is important to ensure you maintain a good credit score. The amount of balance you have left on your credit card, how many credit card accounts you hold and your use of revolving credit also affect your credit score to a great extent.

Your credit score and credit report is formed on the basis of your credit history and you need to have at least one account which has been open or updated in the past six months to get a credit score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.

All in all, if you can pay for all your debts in a timely and consistent manner and not take more debt than you can handle, your credit score shouldn’t be able to trouble you in life. So take care and be wise with your finances.