10 things NOT to do when applying for a credit card

Do one of these things and Wham! you hurt yourself; we tell you how badly
By Cynthia Drake As with any loan, applying for a credit card involves preparation, especially if your credit history is less than sparkling. But a few activities -- some of them not obvious -- can hurt your chances of getting approved for that new plastic. If you're looking for a card, the best thing you can do to increase your chances is to pull your credit report, review it for accuracy and analyze the data to make sure you're in the best possible financial standing. The worst moves you can make to spoil your chances of getting a credit card? Lenders and financial counselors offered these top 10. 1. Letting your credit score slip. 2. Applying for a lot of credit cards or loans. 3. Using too much credit. 4. Missing a payment. 5. Having too many subprime loans on your report. 6. Canceling your other cards. 7. Failing to check your credit report for errors. 8. Avoiding credit altogether. 9. Co-signing a loan for someone who is financially reckless. 10. Changing jobs too many times.

BEWARE THE WHAMMY!

To show the impact of each of these mistakes on your ability to get a credit card, we've assigned each of them a certain number of Whammies. Each mistake is rated on a scale of 1 to 4. The more Whammies, the harder your credit will be hit.

To further illustrate the impact, we've included Whammies, which show -- on a scale of 0 to 4 -- just how much each mistake will hurt you. The most Whammies, the more it hurts.

How much it hurts:

4 of 4 Whammies

1. Letting your credit score slip.

Why it hurts you: Credit card companies look at your score to make their ultimate decision on whether you get a card. With increasing legal constraints on the lending industry and a surge in consumers with money woes, many credit card companies no longer offer credit to low-score applicants. You may be denied a credit card based on your score. Lenders differ widely on their cutoff points. How can people find out the credit score requirements of a company prior to applying for a credit card?

"They cannot, since credit card companies don't reveal this information," said Ray Williams, president of Greenway Capital Management in Fort Worth, Texas. "Therefore, it's best for consumers to understand how to determine if they are a good candidate by only applying if they have credit scores above 650 for most credit card companies. Some will allow 620 but with higher interest rates." Stuck with a low score? Consider applying for a secured credit card, which requires cash collateral, to help you build your score in the meantime. How much it hurts:
2 of 4 Whammies

2. Applying for a lot of credit cards or loans.

Why it hurts you: Multiple inquiries into your credit report make up 10 percent of your score. Maybe you're interested in shopping around for the best deal and want to see who will approve you for a card. But think twice before going on a mass application spree. "You don't want to go out and apply for a bunch of different accounts before applying for a line of credit," said Bruce McClary, representative for ClearPoint Credit Counseling Solutions and a former loan officer. "It may send a couple of messages. First, it tells the lender that you went to a bunch of places and got denied for some reason. Or the possibility exists that you opened an account in each of those places." A small amount of deal shopping is no big problem. Scoring models understand that those looking for a credit card -- like those looking for a mortgage or an auto loan -- will often consider several different lenders within a certain window of time. So, how many is too many? "More than a couple of inquiries would be enough to raise a yellow flag," said McClary. "At five or six, you start getting into red-flag territory." How much it hurts:
3 of 4 Whammies

3. Using too much credit.

Why it hurts you: Your credit utilization ratio accounts for 30 percent of your credit score. If you're hovering near the max on your accounts, you're considered a high risk to credit card companies. "For any existing credit cards you have, you want to minimize percentage utilization and maximize credit available," said Kevin Gallegos, vice president of Freedom Debt Relief in Tempe, Ariz.. "If you have a credit card with a limit of $10,000, and you owe $3,500 on it, that's a 35 percent utilization. Anything over 35 percent is considered high and can impact credit scores, and thereby decrease your chances of getting another card. Over 50 percent will have a definite negative impact on a credit score, and a maxed-out card will very negatively impact the situation."

How much it hurts:

3 of 4 Whammies

4. Missing a payment.
Why it hurts you: Paying on time accounts for the biggest chunk of your credit score, weighing in at 35 percent. Patrick Nichols, a database analyst from Boston, learned this lesson the hard way when he missed a payment deadline by just two hours. "I went from paying [an interest rate of] 0 percent to 30 percent overnight," he said. Nichols started shopping around for other cards to transfer his balance and came up short on offers. Not only did he have the late payment on his record, he also had a high balance and was starting to rack up multiple inquiries. He found he was limited only to cards with higher interest rates. "On-time payments are the most important factor in developing good credit," said Gallegos. "Paying bills on time for as little as one month can raise a modest credit score by 20 points." How much it hurts:
2 of 4 Whammies

5. Having too many subprime loans on your report.

Why it hurts you: If there are too many subprime lenders represented in your "credit mix," (which accounts for 10 percent of your score), it could cause credit card companies to think twice about giving you a card. This one's kind of sneaky, because if you're not careful, you could end up with a subprime loan even if you have good credit. Lenders "look at what types of creditors you are doing business with, and some of them take issue with applicants who come in with a portfolio of subprime lenders," said McClary. "It can affect prime borrowers without them even knowing -- a lot of these retail finance type situations are backed by subprime lenders." McClary said that when people apply for a store credit card in order to take advantage of special financing offers or discounts -- such as in furniture stores, for example -- they need to pay careful attention to the financial institution that is offering the card. Banks tend to be prime lenders but aren't always. Finance companies tend to be subprime lenders but aren't always. To tell the difference, you'll have to do a little digging. For a public company, go to the investor relations section on its website and look at how they describe themselves. For a private firm, it'll take a little more effort but you should be able to get a read on them by Googling the name of the company. How much does this affect your credit? "It's all about proportion," McClary said. "If 90 percent of your creditors are prime creditors and you have this one subprime account, it's going to be like a pebble in an ocean. On the other hand, if you've got a bunch of these store accounts, and they account for 50 or 60 percent of your [loans], that could potentially be a problem."

How much it hurts:

2 of 4 Whammies

6. Canceling your other cards.

Why it hurts you: Canceling accounts in good standing with other companies can delete your history of credit on your report (15 percent of your score) and can also reduce your available credit, which could drive up your debt utilization ratio. People are often tempted to close out accounts they no longer use, just to keep things simple. But doing so can have a negative effect on your credit report. "If you shut down a bunch of accounts at the same time, that starts cutting away at another piece of the pie for your credit score, which is the length of your credit history," said McClary. "Plus, your debt ratio worsens when you shut down inactive accounts. Just leave them inactive." Of course, banks have closed countless inactive cards in recent years. It might be a good idea to make a small purchase -- a pack of gum or a magazine, perhaps -- on the card in question and then pay it off. That little activity could be enough to keep them from shutting your account down and damaging your credit without you knowing about it. How much it hurts:
1 of 4 Whammies (Depends on the severity of the problem)

7. Failing to check your credit report for errors.

Why it hurts you: A case of mistaken identity on your credit report could potentially mean that there are items on your report that belong to other people. The problem can be a simple as having a too-common name or a name that frequently gets misspelled. OK, so there's not a lot you can do if your name is "John Smith." Still, you should be aware that your common name can make you more prone to mistaken identity when it comes to your credit report, which in turn could make it more difficult for you to secure a card. Sometimes credit reports contain errors. The good news is that errors can be fixed with a call or a visit to the websites of the three major consumer credit bureaus: Experian, Equifax and TransUnion. For Revvell Revati, a natural health practitioner in Altadena, Calif., credit card companies often misspell her first name with a W instead of two Vs. "It's an ongoing problem," she said. "I recently attempted to get a credit card and was turned down. I've been accused of fraud." There are a number of things people can do in these situations, said Cate Williams, vice president of financial literacy for Money Management International. "First of all, always apply consistently for credit. Apply with your middle name, just to add another piece of recognition," she said. "If this is a real problem and it happens consistently or you suspect that another person is trying to ride on your coattails, then you need to put a freeze on your credit. That protects you from anybody opening any new accounts."

People with common names or misspelled names should also frequently review their credit reports and consider investing in credit monitoring services, Williams said. How much it hurts:
3 of 4 Whammies

8. Avoiding credit altogether.

Why it hurts you: You need good credit history in order for credit card companies to consider you for a loan. "Don't try to protect things by not borrowing anything," said Gallegos. "Credit card issuers and credit reporting agencies rely on past payment history to gauge how borrowers will do in the future. If you don't borrow, they have no information to rely on. For those without any credit cards, a student loan or car loan helps build a credit history, as does paying every single bill on time and in full. That includes rent, phone, Internet and utility bills." How much it hurts:
4 of 4 Whammies

9. Co-signing a loan for someone who is financially reckless.

Why it hurts you: When you co-sign, you take responsibility for the other person's credit decisions -- good or bad. "Co-signing means you're telling the bank that if he or she doesn't pay it, I will," said Sanford. "The problem is that if the person starts missing payments, the [lender] is not going to contact the co-signer until they're 90 days late. You could have a 750 credit score, and the next thing you know you're at 590." The solution is to make sure that when you co-sign for someone, the bills are mailed to you, so you can keep track of the person's payments on the loan, he said. How much it hurts:
1 of 4 Whammies

10. Changing jobs too many times.

Why it hurts you: Depending on the company, card issuers may question your income stability if you're constantly moving around. Your employment history likely won't have much of an impact on your credit card application, since most applications are processed electronically using calculations based on your credit score alone. However, "more than two or three changes within a year or two might send up a red flag to some credit card issuers," said Gallegos. "Very frequent job changes could -- to some issuers -- bring up questions of an applicant's income stability, which ultimately affects their ability to pay." Read more: http://www.creditcards.com/credit-card-news/10-things-not-to-do-before-applying-for-credit-card1270.php#ixzz1qI6tkEc5 Compare credit cards here - CreditCards.com

How to dispute credit report errors

By Ben Woolsey Your credit report contains information about where you work and live and how you pay your bills -- especially credit card bills. Credit reporting agencies -- also known as credit bureaus -- compile and sell your credit information to businesses. Because businesses use this information to evaluate your applications for credit, insurance, employment and other purposes allowed by the Fair Credit Reporting Act, it's important that the information in your report is complete and accurate. Financial advisers suggest that you periodically review your credit report for inaccuracies or omissions. This is especially important if you're considering making a major purchase, such as buying a home. Checking in advance on the accuracy of information in your credit file could speed the credit-granting process and get you a loan at the rate you deserve. Getting your credit report Under a 2005 amendment to the FCRA, every American is entitled to a free credit report from each of the three major credit bureaus once a year. Go to AnnualCreditReport.com to get yours for free. (And despite other well-known credit report-providing sites, this is the only one that is truly free, with no strings attached.) In addition, if you've been denied credit, insurance, or employment because of information supplied by a credit bureau, the FCRA says the company you applied to must give you the bureau'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. Otherwise, the bureau may charge you for a copy of your report.
Credit card tips mentioned in this article 1. Getting your credit report 2. Correcting credit report errors 3. Removing accurate-but-negative information (Hint: You can't do it) 4. Adding accounts to your report 5. Writing a credit error dispute letter More inside Credit Card Help 1. 7 things you must know about credit cards 2. 10 worst credit card mistakes 3. 8 things you must know about credit card debt 4. 10 things you should know about identity theft

If you simply want a copy of your report, call the bureau listed in the Yellow Pages under "credit" or "credit rating and reporting." Call each credit bureau listed since more than one bureau 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, P.O. Box 2002, Allen, TX 75013; (888) EXPERIAN (397-3742). TransUnion, P.O. Box 1000, Chester, PA 19022; (800) 916-8800.

Correcting credit report errors Under the FCRA, both the credit bureau and the organization that provided the information to the bureau -- such as a bank or credit card issuer -- have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under the law, contact both the credit bureau and the information provider.

First, tell the credit bureau in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your 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. You may want to enclose a copy of your report with the items in question circled. Your letter may look something like the sample below. Send your letter by certified mail, return receipt requested, so you can document what the credit bureau received. Keep copies of your dispute letter and enclosures. Credit bureaus must re-investigate 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 credit bureau, it must investigate, review all relevant information provided by the credit bureau and report the results to the bureau. If the information provider finds the disputed information to be inaccurate, it must notify all nationwide credit bureaus so they can take the appropriate actions. For example:

Disputed information that cannot be verified must be deleted from your file. Erroneous information must be corrected. Incomplete items must be completed. For example, if your file showed that you were late making payments, but failed to show that you were no longer delinquent, the credit bureau must show that you're current. An account that is shown to belong only to another person, it must be deleted.

When the reinvestigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider. Also, if you request, the credit bureau must send notices of corrections to anyone who received your report in the past six months. Job applicants can have a corrected copy of their 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 credit bureau to include your statement of the dispute in your file and in future reports. Second, in addition to writing to the credit bureau, tell the creditor or other information provider in writing that you dispute an item. Again, include copies (NOT originals) of documents that support your position. Many providers specify an address for disputes. If the provider then reports the item to any credit bureau, it must include a notice of your dispute. In addition, if you are correct -- that is, if the disputed information is inaccurate -- the information provider may not use it again. You can't remove accurate negative information When negative information in your report is accurate, only the passage of time can assure its removal. Accurate negative information can generally stay on your report for seven years. There are certain exceptions:

Information about criminal convictions may be reported without any time limit. Bankruptcy information may be reported for 10 years. Credit information reported in response to an application for a job with a salary of more than $75,000 has no time limit. Credit information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Criminal convictions can be reported without any time limit.

Adding accounts to your file Your credit file may not reflect all your credit accounts. Although most national department store and allpurpose bank credit card accounts will be included in your file, not all creditors supply information to credit bureaus: Some travel, entertainment, gas card companies, local retailers and credit unions are among those creditors that don't. If you've been told you were denied credit because of an "insufficient credit file" or "no credit file" and you have accounts with creditors that don't appear in your credit file, ask the credit bureau to add this information to future reports. Although they are not required to do so, many credit bureaus will add verifiable accounts for a fee. You should, however, understand that if these creditors do not report to the credit bureau on a regular basis, these added items will not be updated in your file. Sample credit dispute letter Following is a sample letter that could be used to dispute an inaccurate credit report.

Date Your name Your address Your city, state, ZIP code Complaint department Name of credit bureau Address City, state, ZIP code Dear Sir or Madam: I am writing to dispute the following information in my file. The items I dispute are also encircled on the attached copy of the report I received. (Identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information. Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please re-investigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible. Sincerely, Your name Enclosures: (List what you are enclosing)

Debt collection sample letters

By Connie Prater Debt collectors are limited in what they can do and say by the Fair Debt Collection Practices Act. Often, people in debt can restrict how and when debt collectors can contact them, but to be heard, debtors should assert their rights in writing. CreditCards.com has assembled sample letters to let debtors state their preferences and make them stick. Select the letter below that best describes your circumstance. Verification of debt request This is the first letter a consumer should send if a debt collector calls and asserts a debt is owed. By law, creditors must show you evidence that a debt is owed; until they show it to you, debt collection activity must cease. PDF, text Simple cease communication letter Stops phone calls at home and at work; restricts contacts to U.S. mail. Source: Pioneer Credit Counseling Service PDF, text Cease communication, harassment Demands creditor cease communication and harassment without acknowledging a debt is owed. Source: National Consumer Law Center Text only; customize to describe the harassment Cease communication, harassment letter, version 2 Demands creditor cease communication and harassment, acknowledging a debt is owed. Source: "Credit Hell: How to Dig Out of Debt" by Howard Dvorkin PDF, text Cease communication, harassment letter for debt that is not yours Demands that the creditor cease communication and harassment for debt that is not yours, but someone else's PDF, text
Sample letter found in this Credit Card Help story 1. Verification of debt request 2. Simple cease communication letter 3. Cease communication, harassment 4. Cease communication, harassment, version 2 5. Cease communication, harassment for debt that is not yours 6. California cease contact letter More debt collection stories in Credit Card Help 1. Know your rights: Fair Debt Collection Practices Act 2. 11 tips for dealing with debt collectors 3. Debt collection sample letters 4. Debt collectors' ethics codes

California cease contact letter Credit card videos Asserts rights under California and federal law to halt creditor contact, written For more on this topic, check out this or oral. Source: "Credit Hell: How to Dig Out of Debt" by Howard Dvorkin video: PDF, text

Debt collectors now more willing to deal Using the letters Print it out (PDF) or copy and paste it into a word processing program and customize to your situation. In every case, you will need to fill in your account number; if you don't have it, obtain it from your credit report. You are entitled to a free credit report each year from each credit bureau. Any letter you send to a creditor should be sent by certified mail.

The letters are provided in simple text (.txt) and PDF formats. Any word processing program can open the text files; to view the PDF formats, you need Adobe Reader (free download). All letters used with permission.

Know your rights: Fair Debt Collection Practices Act

By Connie Prater Many consumers have never encountered a debt collector. Some may be fearful or reluctant to take a debt collector's call or read letters about credit card debts they owe. Experts say consumers should face the facts and deal with debt collectors, but also know and understand their rights and protections. Can a debt collector call you repeatedly at work if your boss doesn't allow it? Falsely threaten to sue you or take your house if you don't pay up on old credit card bills? The answer to both questions: not legally. "Knowledge is power. An educated consumer is a better consumer," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, a nationwide group of nonprofit credit counseling agencies. The first place to look for answers on what is and isn't allowed when debt collectors come calling is the Fair Debt Collection Practices Act. The federal law, enacted in 1977 to curb abuses by third-party debt collection agencies, carries protections against harassment, threats, unwanted calls to the workplace and disclosing the existence of debts to friends and neighbors. (See Tips for dealing with debt collection) "The laws are in place for a reason," says Cunningham. "They are to protect consumers from abusive practices." Debt collectors are companies hired on a commission basis by credit card issuers and banks to collect on past-due accounts. Debt collectors may also purchase bad credit card and other loan debt outright from financial institutions and other lenders. These debt buyers own the debt and the right to collect the full amount of the outstanding credit card debt. The basic provisions of the law include:

Topics found in this Credit Card Help story 1. 2. 3. 4. 5. 6. 7. 8. 9. First contact Disputing debts Stopping the calls Harassment and abuse Misrepresentation Post-dating checks Confidentiality Penalties In-house collections 10. Keeping records More debt collection stories in Credit Card Help

The right of consumers to sue debt collectors individually or in class actions for violations of the law. Protection against harassment, including excessive phone calls, abusive language and threats of violence, harm or arrest. Prohibiting disclosure of the existence of debts to others who are not authorized to know about the debts. Banning contact with consumers at inconvenient times, such as before 8 a.m. and after 9 p.m. Allowing consumers to seek proof that they, in fact, actually owe the money the debt collector wants.

Know your rights: Fair Debt Collection Practices Act 11 tips for dealing with debt collectors Debt collection sample letters Debt collectors' ethics codes

First contacts When first contacting consumers, debt collectors must inform debtors of their rights to dispute the debt. This is referred to as the "mini-Miranda" disclosure information, a reference to the Miranda rights statement law enforcement officers must give prior to arresting criminal suspects. The debt collector must tell the debtor: 1) the amount of the debt, 2) the name of the creditor, 3) the fact that unless the consumer disputes the validity of the debt within 30 days, the debt will be considered valid, and 4) that the consumer can ask for verification of the debt.

According to the law, this information can be given over the phone or must be sent to consumers in writing within five days of the first telephone contact. Disputing debts Consumers contacted by debt collection agencies can request written verification or proof of their debts -- but they must do so in writing with a verification letter that must be sent within 30 days of the initial contact from the collector. Collection calls and letters must stop until the debt is verified. "The debt collector must do one of two things upon receipt," says Rozanne Andersen, executive vice president of ACA International, the 3,500-member credit and debt collection industry trade group. -- Rozanne Andersen Debt collection industry spokeswoman "They must provide verification of the debt with information to help the consumer understand the identity of the original creditor. The debt collector can either provide that verification and can resume collection or if the debt collector cannot provide that verification, the debt collector must cease collection on that account." They must provide verification of the debt. ACA has adopted a code of ethics governing how its members should conduct themselves. Andersen notes that asserting their rights under the fair debt collection law does not absolve consumers of the obligation to pay their debts if they truly owe the money. "I strongly suggest that they realize that they owe. They need to address those debts and they need to work with debt collectors to work out a reasonable payment plan." Stop the calls If collectors are calling incessantly, calling workplaces when they know it is not allowed by employers, jeopardizing a consumer's job or harassing debtors' friends or neighbors, a cease communication letter can be sent. Consumers can request that debt collectors communicate with them only in writing or cease communication altogether. Afterward, the debt collector may only communicate with the consumer to inform him or her that collection has been terminated or to let the consumer know about a specific action, such as a lawsuit, the collector intends to make. If consumers are represented in the debt collection case by an attorney, the law states collectors must communicate directly with the attorney rather than the debtor, unless the attorney fails to respond to the debt collector in a reasonable time period.

Surprisingly humane Persistently rude Businesslike. They've got a job to do, too I've never dealt with them

Vote

Harassment and abuse Using or threatening to use violence or other criminal actions to harm consumers, their property or their reputation are illegal under the fair debt collections law. Also banned: obscene, profane or offensive language. Calling the consumer repeatedly, hanging up, calling and not saying anything, anonymous phone calls or any other telephone behavior intended to annoy, harass or abuse the consumer, their family members, neighbors or co-workers is also prohibited by the law. "If the calls are considered harassment by the consumer, they can ask that they desist," says David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, a nationwide group of nonprofit credit counseling agencies. "If a collection agency is calling repeatedly throughout the day, if there are threats, if they are abusive in their language or intimidating, those kinds of things can be shown to be harassment and that is prohibited by the Fair Debt Collections Act." If the calls are considered harassment ... When harassing phone calls are a problem, consumers can request that all communication and harassment stop by sending a more they can ask that they desist. strongly worded cease communication letter informing debt -- David Jones Credit counseling industry spokesman collectors they are in violation of the federal law. Debt collectors are also banned from publishing lists of consumers who refuse to pay their debts (except to send information to a credit reporting bureau or other authorized people such as the original creditor or the creditor's attorneys). Misrepresentation Some consumers have reported debt collectors showing up at their homes, flashing something that looks like a badge and claiming to be plain clothed police officers. The fair debt collection law prohibits false, deceptive or misleading tactics when trying to collect debts. Impersonating an officer is a crime in many jurisdictions and consumer credit counselors advise consumers to contact their local police departments if this occurs. Debt collectors also cannot claim to be attorneys or credit reporting agencies -- if they in fact are not -- and cannot claim that correspondence are legal court documents if they are not. Threats to arrest debtors or anyone else, in addition to threats to file suit, garnish wages or sell or seize property are also illegal unless collectors actually intend to take these actions. Threats to take actions that cannot be legally taken are also banned under the law. An example is the case of debts that have gone beyond the statute of limitations -- the deadline for filing lawsuits. Debt collectors may not threaten to file suit in these cases because the statute of limitations has expired. Post-dating checks Consumer advocates recommend debtors avoid paying debt collectors with post-dated checks, even though collectors may pressure consumers to do so. Numerous problems can arise, including collectors depositing the checks prior to the date specified on the checks.
Getting help with debt collection

To file a complaint about a debt collector or creditor's in-house collection agency, call the U.S. Federal Trade Commission's tollfree hotline at (877) FTC-HELP or

"They'll keep them on file and then they try and push that client into a verbal OK to go into their checking account," says Leesa Kumley, an accredited consumer counselor at Pioneer Credit Counseling in Rapid It's also a good idea to file a City, S.D. She advises consumers to avoid sending debt collectors complaint with your state consumer personal checks. "It gives them the bank routing number and account protection agency. State laws number. In the event of a judgment, they now have your routing number governing debt collection vary. and account number to take the funds." Find your state attorney general through the National Association of The fair debt collections law prohibits soliciting post-dated checks if they Attorneys General. will be used to threaten consumers with criminal prosecution for bouncing checks. The law allows debt collectors to accept post-dated Find an accredited counseling checks or other payment method (such as an electronic payment). agency to help you sort through the However, if the date on the check is more than five days away, debt bills and draft a payment plan that collectors who intend to cash checks prematurely must notify consumers works for your family budget. The in writing at least three business days before they deposit the checks. two major accrediting agencies for credit counselors are the National Other unfair practices cited by the law include tacking interest, fees or Foundation for Credit charges or expenses on to the principal debt owed by the consumer. These Counseling and the Association of extra fees are not permitted -- unless the original credit agreement allows Independent Consumer Credit these additions or it is permitted by law. Counseling Agencies. Each has an online referral service to certified Collect telephone calls and fees for telegrams to consumers are also local counselors. banned if they conceal the fact that the communication is for debt collection purposes. ACA International, the Association of Credit and Confidentiality Collection Professionals, has The fact that consumers have debts is private information. The law launched a complaint system to protects that privacy by making it illegal for debt collectors to disclose the police its members. existence of debts to anyone other than authorized individuals (such as an attorney representing the debtor) or a spouse who is also responsible for The National Consumer Law the debt. Center has resource materials to help consumers navigate the debt Any letters or telegrams sent to debtors must not identify senders as debt collection process. collectors or as being in the debt collection business. Thus, envelopes cannot contain the name of the collection agency if 'collection' or 'debt' is part of the name. Logos or symbols on the envelopes may also not involve debt collection. the FTC website. Postcards, which can be read by others, may not be used in any correspondence.
Credit card videos Penalties Consumers who feel they have been victims of unfair or deceptive debt For more on this topic, check out this collection practices can file civil suits against the collectors -- but they must do video: Debt collectors now more willing so within one year of the violations. If successful in court, an individual to deal consumer may be awarded damages for actual losses incurred because of the violations, any court costs or attorneys' fees and up to $1,000 in additional damages. Consumers filing class action lawsuits can recover up to $500,000 or 1 percent of the net worth of the debt collector -- whichever is lower.

Consumer advocates have complained that the $1,000 damage cap for individuals -- set in 1977 when the law was originally enacted -- is too low by today's standards.

'In-house' collection One important exclusion from the fair debt collection law is so-called in-house collection departments. These are the collection divisions of banks, retailers or other credit issuers. Customers who miss one or two monthly payments may be called or receive letters from these in-house collection agents. However, laws that protect consumers from abusive language, threats and other unfair practices when dealing with third-party debt collectors do not apply for in-house collectors. Why? Lawmakers who drafted the federal law felt credit card issuers had a vested interest in retaining good customer relations and were less likely to engage in harassing, threatening behavior. That reasoning hasn't proven true. According to the FTC, complaints about in-house debt collection practices nearly doubled between 2003 and 2006 -- from nearly 13,000 to more than 21,000. "You can be a lot more aggressive when it's your own debt," says Howard Dvorkin, a nationally recognized consumer advocate and author of the book "Credit Hell: How to Dig Out of Debt." Keeping records Consumer advocates recommend keeping copies of all written correspondence to and from debt collectors as well as sending any letters via certified U.S. mail. Some recommend getting a return receipt as well. Others advise keeping a log or journal of the day and time of calls, especially if there are multiple debts and multiple debt collectors calling. Because of an increase in debt buying -- where old credit card and consumer loan debt may be resold multiple times -- consumers may be contacted about the same debt numerous times by different collection agencies.

Read more: http://www.creditcards.com/credit-card-news/help/fair-debt-collection-practices-act6000.php#ixzz1qI7wTZO8 Compare credit cards here - CreditCards.com