What Is ChexSystems?

Like credit reporting agencies, ChexSystems is an information database company that collects, packages and sells information.  Unlike the credit reporting agencies, ChexSystems reports debit information and not credit information.  Where Experian, Equifax and TransUnion are credit bureaus, ChexSystems is a debit bureau.  For a fee, banks and retailers can access and use this information to make decisions about new bank accounts and the acceptance of checks.  ChexSystems also tracks the opening and closing of bank accounts, check order history, check writing history, history of collection activity on unpaid accounts, frequency of debit card and ATM use, and household demographics.  It is estimated that eighty percent of all commercial banks and credit unions in the United States use ChexSystems as a step in the consumer checking or savings account application process.

How Does ChexSystems Work?

When you present a check to a retailer that uses ChexSystems, your account is identified by a code that is entered into a computer or, in the case of a debit card, by swiping your card.  The resulting information will let the merchant know whether or not monies are available.  This valuable service can potentially save merchants a lot of money.   However, if your ChexSystems file contains inaccurate or outdated information, it can affect your ability to open certain bank accounts with most banks.  Since the same laws that govern the credit bureaus also affect debit bureaus, you can request a copy of your debit bureau report to see if any adverse information played a part in your being denied certain bank services.

The Importance of a Good Debit Report

It’s important to know that, in this day and age, having a checking account is an integral part of purchasing things on credit.  Creditors want to know how you’re going to repay a loan.  This is especially true when purchasing big ticket items like homes and automobiles.  If your goal includes purchasing a big ticket item, make sure that you’re prepared to do so with a good checking account and good debit report history.

There are banks that don’t use ChexSystems to check a potential customer’s debit report.  These banks are typically referred to as “Second Chance Checking” banks and can be found by doing an Internet search.  If you’d prefer to do business with a bank that utilizes ChexSystems, National Credit Solutions also works on our clients’ ChexSystems files.

We hope this information helps.  If you have any questions at all relating to ChexSystems or your credit, please call, email or reply here.

Thanks,

Brad Boruk
The Credit Guy
FCRA Certified Credit Strategist
214 504-7101

Debts come with an expiration date known as the Statute of Limitations that prevents original creditors and debt collectors from pursuing these debts indefinitely.  These Statute of Limitations vary from state to state.  If the debt in question is beyond the Statute of Limitations in your state, you may not have a legal responsibility to pay.

Understanding the Difference Between Credit Reporting Time Limits and Statute of Limitations

There is a considerable amount of confusion on the part of consumers about Statute of Limitations and the Credit Reporting Time Limit as defined by the FCRA.  Both do come with time limits; however, they have different time frames and different effects.

The Credit Reporting Time Limit is the maximum amount of time that credit reporting agencies can report delinquent debts on your credit file.   Most delinquent accounts can report on a consumer’s file for a maximum of seven years.  There are some exceptions, though:  bankruptcies can remain on a credit file for up to 10 years (Chapter 7 remains on your report for 10 years from date of filing and Chapter 13 remains for 7 years from date of discharge), and tax liens can be reported up to 15 years.

The Statute of Limitations for collecting a debt is the period of time that a creditor or collector can use the court to force you to pay for a debt.  The time period starts on the account’s last date of activity and varies by state.

Using the Statute of Limitations to Your Advantage

To determine whether or not a particular account is outside the Statute of Limitations, you will need to know two things:  1) As stated above, you will need to know the Statute of Limitations that applies to your state; and  2)  Because the Statute of Limitations begins on the Date of Last Activity (DLA), you will need to know the date the account was last active.  To determine this date, you can pull a credit report.  Be aware that most consumer reports do not show the Date of Last Activity; however, you can purchase a consumer report from Equidata that will give you this information from all three credit reporting agencies, Experian, Equifax and TransUnion.  The cost is $24.95 for your report from Equidata.

Keep in mind that if the Statute of Limitations on a debt has expired, debt collectors may still attempt to collect the debt.  They are counting on the fact that most consumers know little or nothing about the Statute of Limitations and hoping that, if threatened enough, you will pay the debt off.  They may even sue you to get a judgment.  If you’re positive that the Statue of Limitations on the debt has expired, you may use this as a defense if the case does go to court.  If you’re unsure, we recommend that you contact a qualified attorney that specializes in this field.

NOTE:  The Date of Last Activity can be updated, restarting the Statute of Limitations.  If you take some sort of action on the debt, you are most likely updating the Date of Last Activity.  If you make or promise to make a payment, if you enter into an agreement to pay or if you charge anything to the account, you may actually be restarting the Statute of Limitations by updating the Date of Last Activity.

What’s The Statute Of Limitations in My State?

The Statue of Limitations on debt varies from state to state.  You can find your state’s Statute of Limitations here:  Statute of Limitations by State.

If you have moved from a state with a higher Statute of Limitations, be aware that a debt collector may try to use the Statute of Limitations for the state from which you moved.  This would give the collector more time to attempt to collect your debt.

What the Statute Of Limitations Does Not Do

Keep in mind when the Statute of Limitations expires, it only prevents a collector from winning a judgment against you when you can prove the Statute of Limitations has indeed expired.  The Statute of Limitations cannot:

• Keep a collector from filing a lawsuit against you.  The Statute of Limitations can keep them from winning the court case if you can legitimately provide proof.
• Wipe out the account.  You still owe the debt.  Even though an account may have an expired Statute of Limitations, the creditor may ask you to pay the debt before extending credit to you again.
• Prevent the debt from being reported on your credit report. The debt can be reported as long as the Credit Reporting Time limit allows, as defined in the FCRA.

We hope this information helps.  If you have any questions at all relating to Statutes of Limitations or credit in general, please call or email me!

Thanks,

Brad Boruk
The Credit Guy
214 504-7101

Growing up, I remember my father had great credit, even though he had very little credit. Like most folks raised during the Great Depression, my dad paid for most things with cash, normally only financing big ticket items related to his business.  About the only credit knowledge he passed down to me was “Pay your bills on time.”

If you think about it, almost all of us learn about credit in the “School of Hard Knocks.”  While we may learn how to balance a checkbook or make a budget in school, I don’t know of one school that really teaches students about credit and credit scores.  Is it any wonder that so many of us have bad credit?

If you read my earlier post Credit Score Confusion, you are aware that there are several different types of credit reports and scoring modules.  The most popular and widely used of all these scoring modules is what’s known as the FICO^® score.  FICO^® derives its name from the Fair Isaac Company, which has been in business since 1956.  Since your FICO^® scores are what most lenders use to determine your credit-worthiness, today we will be looking at how your FICO^® scores are calculated.

In researching information and preparing for this article, I came across a new (or new to me) website: www.ScoreInfo.org.  I can honestly say this is the best, most comprehensive site for everything FICO^® that I’ve ever seen.  So, instead of giving you my 2 cents, I’m going to point you to some pages at ScoreInfo that I think will help you better understand and make sense of your credit scores.

• FICO^® Credit Score Ingredients – Explains in detail what factors go into your FICO^® scores.
• What Your FICO^® Score Means – Details what your scores mean in relation to credit decisions.

There are literally dozens of pages with a wealth of knowledge to be found at ScoreInfo.org.  Be sure and check out all of the articles that may interest you.  When it comes to credit, the more you know, the better opportunity you have to have the highest possible credit scores!

DAMAGE POINTS

We get a lot of questions from Clients wanting to know just how many points a certain derogatory action may cost their credit scores.  I’ve even had Clients tell me that late payments don’t affect credit scores!  In the chart below, you will find out just how many points various credit mistakes affect your credit scores.  This information was provided by FICO^®.

I hope this information has been helpful.  If you have any questions or comments, please feel free to contact me personally or reply on this blog.

Regards,

Brad Boruk
FCRA-Certified Credit Strategist
National Credit Solutions
214 504-7101

That truck driver you flipped off?  Let me tell you his story.

Let me tell you a little about the truck driver you just flipped off because he was passing another truck, and you had to cancel the cruise control and slow down until he completed the pass and moved back over.

His truck is governed to 68 miles an hour, because the company he leases it from believes it keeps him and the public and the equipment safer.

The truck he passed was probably running under 65 mph to conserve fuel. You see, the best these trucks do for fuel economy is about 8 miles per gallon. With fuel at almost $4 per gallon — well, you do the math. And, yes, that driver pays for his own fuel.

He needs to be 1,014 miles from where he loaded in two days. And he can’t fudge his federally mandated driver log, because he no longer does it on paper; he is logged electronically.

He can drive 11 hours in a 14-hour period; then he must take a 10-hour break. And considering that the shipper where he loaded held him up for five hours because it is understaffed, he now needs to run without stopping for lunch and dinner breaks.

If he misses his delivery appointment, he will be rescheduled for the next day, because the receiver has booked its docks solid (and has cut staff to a minimum). That means the driver sits, losing 500-plus miles for the week.

Which means his profit will be cut, and he will take less money home to his family. Most of these guys are gone 10 days, and home for a day and a half, and take home an average of $500 a week if everything goes well.

You can’t tell by looking at him, but two hours ago he took a call informing him that his only sister was involved in a car accident, and though everything possible was done to save her, she died. They had flown her to a trauma hospital in Detroit, but it was too late.

He hadn’t seen her since last Christmas, but they talked on the phone every week. The load he is pulling is going to Atlanta, and he will probably not be able to get to the funeral.

His dispatcher will do everything possible to get him there, but the chances are slim. So he has hardly noticed your displeasure at having to slow down for him. It’s not that he doesn’t care; he’s just numb.

Everything you buy at the store and everything you order online moves by truck. Planes and trains can’t get it to your house or grocery store. We are dependent on trucks to move product from the airport and the rail yards to the stores and our homes.

Every day, experienced and qualified drivers give it up because the government, the traffic and the greedy companies involved in trucking have drained their enthusiasm for this life.

They take a job at a factory if they can find it, and are replaced by an inexperienced youngster dreaming of the open road. This inexperience leads to late deliveries, causing shortages and higher prices at the store, and crashes that lead to unnecessary deaths.

It is even possible that is what led to the death of this driver’s sister.

This is a true story; it happened last week. The driver’s name is Harold, and I am his dispatcher.

Dan Hanson, of Belle Plaine, Minn., is a fleet manager.

You can view this article on the Star Tribune website here:  Star Tribune

Thanks to all you truckers out there that keep our country going.

Brad Boruk
The Credit Guy
National Credit Solutions
214 504-7101

There seems to be a lot of confusion today about credit scores.  Most of this confusion seems to primarily center around two things:  1)  consumer report scores differentiating from mortgage scores and auto-enhanced scores, and 2)  what factors influence credit scores.  It sometimes seems that the consumer is purposely being kept in the dark.

Today, we’re going to take a look at the different types of credit reports and credit scores.   While numerous types of credit reports exist (many of them are specialty reports), there are three basic types of reports: Consumer Reports, Mortgage Reports and Auto-Enhanced Reports.  Here is a brief description of each:

Consumer Reports:  This type of report is a great resource for consumers to monitor their credit.  Consumers are entitled to one free credit report per year (this can vary depending on the state in which the consumer resides) and are available at AnnualCreditReport.com.  When you pull this type of report, it’s considered a “soft” inquiry that won’t affect your credit scores; however, you typically can’t purchase goods or services with a Consumer Report.

Mortgage Reports:  This is report that your mortgage loan officer would use to make a credit decision when you are purchasing or refinancing a home.  This report normally contains the most thorough details, along with resource codes that spell out what factors are having the greatest effect on your credit scores.  This type of credit pull is considered a “hard” inquiry and can affect your credit scores.

Auto-Enhanced Reports:  When you go to an automobile dealership, this is the report that the finance department will use to determine your credit worthiness to purchase or lease a vehicle.  As the name implies, the scores are enhanced based on your previous automobile payment history.  If you have an excellent car payment history, your scores on this report will probably be higher than on the other reports.  Conversely, if you have a poor car payment history, these scores may be lower than on the other reports.  Because the purpose of pulling this report is to purchase a vehicle, this is also considered a “hard” inquiry and may affect your credit scores.

A few years ago, the Washington Post had an excellent article explaining that these three types of scores can vary by as much as 200 points!  While I’ve personally never seen this much of a discrepancy, I have seen these scores vary by as much as 90 to 100 points.  The good news is, the US Government has put the Fair Access to Credit Scores Act of  2010 in place to ensure that consumers now have access to various credit reports and credit scores if they were denied credit.  You can find more details of this act at the SmartCredit.com Blog.

I hope this helps clear up some of the confusion that consumers face when confronted with different types of credit reports and credit scores.  In the near future, I will be discussing what factors actually affect your credit scores, and what those affects are.

If you have any questions regarding your credit scores or your credit situation and would like to visit with someone, please feel free to personally contact me, Brad Boruk, at 214 504-7101.

Brad Boruk
FCRA-Certified Credit Strategist
National Credit Solutions
214 504-7101

There are, of course, several things that need to be done if you’re ever a victim of ID theft.  One of the best articles I’ve read on the subject can be found here:   Identity Theft

Contrary to what this article states, I believe the very first step should be to contact the creditor(s) and make them aware of the situation, unless there are too many creditors to contact in a short period of time.  In that case, it  may be best to contact the credit reporting agencies first.  Here’s the contact information for Experian, Equifax and TransUnion to report Identity Theft:

Keep in mind that, if you are a true victim of ID theft, having a police report filed on the offense(s) may be very beneficial later on to prove to the credit reporting agencies and potential creditors that you were indeed a victim of ID theft.

If you have any questions, please feel free to contact me.

Thanks,

Brad Boruk
The Credit Guy
FCRA-Certified Credit Strategist
National Credit Solutions
214 504-7101

Recently, I received a call from a client, who I’ll refer to as ‘Ms. Smith.’  Ms. Smith called me personally and told me she was very happy with the wonderful job we had done in removing a lot of the derogatory information contained on her credit report.  She then added that she wasn’t happy with her scores.  Looking over her account in our CRM program, I could see that when Ms. Smith had entered our program she was lacking open trade lines in order to help boost her scores, and I could also see that her Client Services Representative had emailed several different links to trade lines we had deemed to be beneficial to Ms. Smith’s credit scores.  I asked Ms. Smith if she had applied for any of the trade lines that we had recommended.  Her response was, “No, I know I need to get that done but I just haven’t taken the time.”  After explaining the importance and effect of positive trade lines on her credit scores, Ms. Smith assured me she would make the time to follow up and open the trade lines we had referred to her.

With most consumer’s credit, raising credit scores isn’t simply a matter of removing derogatory information; it’s also about making sure that the consumer has a healthy mix of credit (installment accounts and revolving accounts) and that the consumer is utilizing those accounts so that they maximize their credit scores.

Perhaps you remember when, in your younger days, you were denied credit because you had no credit history.  A similar effect happens whenever you have bad credit and can’t open new accounts to help rebuild your credit.  It seems impossible to rebuild your credit when creditors won’t extend you credit!  National Credit Solutions takes the pain out of the rebuilding process.  Because banks, credit card companies and stores change their offers and scoring criteria on a routine basis, our Client Services Department spends many hours each month making sure that our clients receive the most up-to-date information and the very best offers available for their particular credit situation.

If you’re considering hiring someone to assist you with your credit situation and they are not talking to you about the importance of open trade lines, do yourself a favor and exclude them from any further consideration.  It’s important to know that great credit scores are a result of having little or no derogatory information on the credit file and good, open trade lines that are being paid on time, month in and month out.  We work hard to provide that information.  After that, it’s up to the client.

Brad Boruk
FCRA Certified Credit Strategist
National Credit Solutions
214 504-7101

More and more employers are looking at prospective employees’ credit files, and your credit score can be used to determine whether or not you’ll be hired or promoted in today’s job market.  The U.S. Military, certain government agencies and numerous companies require an employee to have good credit in order for that employee to be considered for positions that require a security clearance.

It’s common knowledge that apartment managers have been looking at the credit of potential renters for years.  Today, more and more landlords are also getting into the act and deciding which potential renter gets to rent their property by looking at their credit file.

Is it fair to be lumped into a group because of your credit score?   If the items on your credit report are accurate, a case can be made that these practices are fair.  Insurance companies claim that consumers with better credit scores tend to have fewer claims and, as a result, the cost to manage their accounts is much less than consumers with bad credit scores.  Most employers will tell you that employees with better credit tend to have fewer sick days and are generally considered more reliable and trustworthy, thereby lowering the cost of employment.  Apartment managers and landlords can give us statistics that show renters with good credit take better care of the property and tend to pay their rent on time.  So, while this practice may seem unfair, who can blame someone for wanting to do business with a person that has good credit?

We at National Credit Solutions understand that bad things happen to good people.  Have you ever noticed how some people blame others for everything that goes wrong with them?  Individuals that have good credit tend to accept responsibility for their actions and, when they’ve made mistakes, resolve to make better decisions in the future.  If you’ve had bad things happen in your past and your credit scores have suffered as a result, if you’re ready to accept responsibility and do something about it, please feel free to contact me personally.  I’d like to speak with you, find out what your goals and dreams are, and see what we can do to help you.

Brad Boruk
FCRA Certified Credit Strategist
National Credit Solutions
214 504-7101