Kristy's Blog

From the FTC’s blog:

The story started with an email from a company the family knew. It said ‘We received your order.’ That seemed ok; they had recently placed an order. A second email said ‘Your new mobile phone is on its way’ and listed a delivery address that wasn’t theirs. ‘That’s wrong!’ my co-worker thought, and she called the company.

The company confirmed that someone using her husband’s account had ordered a mobile phone, and was having it sent to a nearby hotel. She told the company it was a scam, closed the account and filed an identity theft report. She also contacted local law enforcement. When the scammer — complete with fake ID — came to pick up the package, local law enforcement arrested him.

You may think that it’s pointless to report your cases of ID theft to the FTC or the authorities, but in actuality, it does a lot of good. It’s also pretty easy. Most city police departments have online forms you can fill out to file a police report, and by having a police report, you are afforded a few protections under the Fair Credit Reporting Act:

1. You have the right to ask that nationwide consumer reporting agencies place “fraud alerts” in your file to let potential creditors and others know that you may be a victim of identity theft.
2. You have the right to free copies of the information in your file (you “file disclosure”).
3. You have the right to obtain documents relating to fraudulent transactions made or accounts opened using your personal information.
4. You have the right to obtain information from a debt collector.
5. If you believe information in your file results from identity theft, you have the right to ask that a consumer reporting agency block that information from your file.
6. You also may prevent businesses from reporting information about you to consumer reporting agencies if you believe the information is a result of identity theft.

In addition, if enough complaints are filed with the FTC and they notice a pattern or a specific perpetrator, the FTC can initiate legal proceeding against the entities or get your state attorney general involved in an investigation.

Report your incidences of theft!

Only a small percentage of the world’s working population are debt free. For many, the only reason they’re working is to pay off debt. Even rural areas are seeing an alarming increase in personal debt among its people. What is the reason for this increase in debt and what can be done about it?

Not Enough Risk Cover

Life cover is not the only type of coverage you should consider the moment you start earning a salary. You would also need to consider insurance for your car and household content. Then, of course, there’s health cover. The more you go into detail with a financial adviser, the more options they will present to you; for instance, retrenchment cover, disability and more. When a risk incident happens and you’re not covered, you will still be liable for the costs, which could result in a judgment. This will drop your credit score, making it virtually impossible to get credit. Many people apply for credit the moment they see things are spiraling out of control, but few are able to raise enough to cover the mounting risk incident bills. Before they know it, they’re in a situation wherein they are unable to pay the risk bills and the mountain of debt they got themselves into. The remedy here is to ensure that you are sufficiently covered. Even starting with the basic plan is better than nothing.

Using The Wrong Finance Method

Stepping into a bank and getting a credit card with a $50 000 limit to purchase a vehicle is reckless and expensive, unless you are able to settle the account within a month or two or if there is no credit interest charged on the account. The right way is to apply for installment finance, unless you have 0% interest on another product.

It also dangerous to purchase everyday goods on your credit card and then paying back the outstanding balance in installments. Not only does this make you reliant on your credit card, but it also means you will struggle to pay it off.

Mustering up the courage to go to a bank for a loan does not sit well with everyone. Some prefer approaching in-house finance and getting the likes of payday loans and microloans. The unfortunate thing is that this creates a cycle of perpetual lending as these limits are usually low, but payable in one installment. Approaching a bank and rather applying for finance through them means that you are able to repay these installments over a few months. Shop around and look for favorable interest as opposed to just going with the first offer.

Getting a Loan Without Knowing the Terms or Interest Rate

These are common in rural communities, especially where the lender is their boss. The terms are decided monthly, and when the owner is unhappy about something, he pushes up the rate. The worker is then unable to work for anyone else as they would need to pay off their debt before they are released. These workers are often under the impression that they owe a certain amount of money, but when they inquire, the figure far outweighs any future income they may receive.

Loan sharks work in a similar manner, although stories of violence are not uncommon where they are concerned. The interest is exorbitant and failure to pay has dire consequences.

Getting into debt is a serious decision to make, with many implications if not handled correctly. Approaching reputable institutions is always a better option, as you know they need to comply with certain regulations. This offers protection to both the lender and borrower.

If you’re already struggling with your finances, the last thing you want is to wake up one morning and find out that your bank accounts have been frozen or your wages have been garnished. Unfortunately, aggressive debt collectors can do just that. Debt collection lawsuits have become more common in the last decade, and the judgments that result give collection agencies the ability to seize a debtor’s assets. In an effort to protect consumers from unethical business practices on the part of debt collectors, each state utilizes a statute of limitations that places restrictions on these types of lawsuits.

Debt Collection Statute of Limitations

The statute of limitations for collecting debt is a limited time period during which the original creditor or any collection agency that purchases the debt can legally sue the debtor. The statute of limitations begins 180 days after the debtor’s last payment. Each statute of limitations differs by state, but most range from three to five years.

Out-of-Statute Lawsuits

Debtors often aren’t aware that the statute of limitations on their debt has passed. Many are unaware that such a thing exists at all. Unethical collectors prey on this ignorance by filing lawsuits long after the statutory period expires. Any debt collection lawsuit filed over obsolete debt is known as an “out-of-statute” lawsuit.

You cannot ignore an out-of-statute lawsuit simply because the statute of limitations has expired. The court isn’t aware of your debt’s statute of limitations, and it will waste no time awarding the collection agency a judgment if you fail to respond to the lawsuit or appear in court. You must actively contest the lawsuit and inform the court that the statute of limitations has passed in order to avoid a civil judgment.

Circumstances That May Affect the Statute of Limitations

The statute of limitations isn’t unyielding. Certain actions you take can extend this term–giving debt collectors additional time in which to sue you. Making a payment is one example of an action that negatively affects the statute of limitations. Because the date of your last payment dictates when the clock starts ticking, making a payment resets the statute of limitations in most states.

Not only can you unintentionally reset the statute of limitations, you can pause it indefinitely by becoming inaccessible to the creditor. If you were to move overseas, for example, it would be difficult–if not impossible–for creditors to collect from you. The statute of limitations remains frozen until you return. In some cases, moving out of state is enough to temporarily freeze the statutory period.

The Statue of Limitations Protects You From Legal Action -Not Liability

An expired statute of limitations isn’t a shield against debt collection in general. Although it gives you an airtight defense against future lawsuits, it doesn’t protect you from everyday collection activity. Even if a debt collector no longer has the right to sue you, the company will likely continue to pursue you for payment. You remain liable for the debts you owe regardless of whether the statute of limitations has expired or not.

Unfortunately, debt collectors don’t have to sue you to make your life miserable. As long as a collection agency owns your debt, it has the right to pull your credit reports (leaving a record of its inquiry and slightly damaging your credit scores), contact you demanding payment and sell or transfer ownership of your account to another collector. If you defaulted on the original debt within the past seven years,you can also expect the debt to appear on your credit reports. Delinquent debts are particularly damaging for your credit scores.

Unpaid debt carries consequences far beyond a mere lawsuit. Even if you can no longer be held legally liable for payment, it’s always wise to pay off your debts whenever possible. If you opt to pay, contact your creditor and work out an agreement in writing first. Making a payment restarts the statute of limitations and, without a written agreement to the contrary, could leave you facing the very lawsuit you were trying to avoid.

Types of Legal Debt Agreements

Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, “handshake agreement”). Remember a verbal contract is legal, if tougher to prove in court.

Written Contract: You agree to pay on a loan under the terms written in a document that you and your debtor have signed.

Promissory Note: You agree to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is an example of a promissory note.

Open-ended Accounts: These are revolving lines of credit with varying balances. The best example is a credit card account. Note: A credit card is ALWAYS an open account. This is established under the Truth-in-Lending Act.

Statute of Limitations on Debt in Years – State by State Listing

The material provided in this table for informational purposes only and should not be construed as legal advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.

Regardless of the financial strain you may find yourself under, keeping your debts out of collections should be one of your highest priorities. Not only do collections severely damage your credit rating, but negative entries remain on your credit report for seven years–sometimes longer, depending on the debt. In extreme cases, creditors can file a lawsuit against you. Lawsuits carry severe consequences like wage garnishment, bank levies and, in some cases, property seizure. Fortunately, most forms of debt carry a grace period before sending accounts to collections. This gives you time to negotiate with your creditor in an effort to avoid collection costs and protect your credit rating.

Credit Card Companies

One of the most common debts consumers default on is credit card debt. Credit card companies would strongly prefer not to send your unpaid debt to a third-party collection agency. Because third-party collectors take a percentage of the amount they collect, credit card providers put extensive effort toward collecting defaulted debts on their own before turning to an outside agency for help. Major credit card providers generally wait 180 days from the date of your last payment to send your account to an outside collector.

Medical Debts

Unlike credit card companies, health care providers have few advanced resources for dealing with defaulted debts. They also have more difficulty in coercing debtors to pay, since medical debts aren’t something most individuals budget for. Because of this, health care providers often send medical debts to collection agencies after as little as 30 to 60 days without payment. Fortunately, health care providers are often easier to negotiate with than other types of creditors–allowing you to keep your medical debts out of collections even if you can’t pay the full amount right away.

Post-foreclosure Debt

If you’ve lost your home to foreclosure and the sale of your home doesn’t cover the remaining balance of your mortgage loan, you are still liable to your mortgage company for that amount. As a rule, mortgage companies don’t generally send post-foreclosure debts to collection agencies unless the amount you owe is relatively small. Lenders often wait–sometimes years–to give you time to get back on your feet financially before attempting to collect the unpaid balance via a lawsuit. Although this is financially devastating for most former homeowners, you can often prevent a lawsuit from occurring by contacting your mortgage lender and making payment arrangements on your remaining mortgage balance. Because lenders may wait years before filing suit against you, the grace period for negotiating and paying this form of debt is substantial.

Keeping Debts Out of Collections

When debts fall into the hands of a third-party collection agency, it’s usually game over for the debtor. Most collection agencies have a policy of immediately reporting new accounts to the credit bureaus. Once this occurs, depending on what scoring models your lenders use, paying off the debt may not improve your credit scores nor cause the account to be removed from your credit report (although paying the debt will protect you from the possibility of legal action later on). It’s critical that you address your unpaid debt problems with the original creditors before these accounts fall into the hands of collectors. It’s often possible to postpone payments or even pay a lesser amount until you get back on your feet financially. Remember, your creditors would far rather work with you than sell your debt to a collection agency for much less than it’s worth.

It’s a given that if you leave your student loans, tax debts or child support obligations unpaid, you’ll probably find yourself facing a wage garnishment. What many consumers fail to realize, however, is that commercial creditors, such as collection agencies, can also garnish wages under certain circumstances.

Debt Collection Lawsuits and Civil Judgments

No collection agency can legally seize your wages without first filing and winning a debt collection lawsuit against you. Should the collector win the lawsuit, the court will grant it a civil judgment against you. The collector then becomes a “judgment creditor.” Judgment creditors have the ability to force consumers to pay, giving them a wider ranger of debt collection options than creditors without judgments.

State guidelines vary, but in addition to wage garnishment, a judgment creditor can garnish your bank accounts via a bank levy, or attach a lien to your real estate. In extreme circumstances, a collector may also opt to seize and sell your personal property in lieu of payment.

How Wage Garnishment Works

A collection agency must provide the court with proof of its judgment in order to obtain a writ of execution. The sheriff will then serve the writ of execution on your employer. Once officially served, your employer is bound by law to withhold a portion of your wages each pay period and remit the funds to the debt collector.

If the collection agency doesn’t know where you work, it can request that the court summon you to a post-judgment interrogatory. This is a hearing in which the judgment creditor can ask you a series of questions about your assets and employment. Although answering these questions gives your creditor the information necessary to pursue wage garnishment, refusing to respond or knowingly giving false information could leave you facing contempt charges from the court.

Wage Garnishment Limitation

Even if a debt collector obtains a judgment against you, that doesn’t give the company the right to seize your entire paycheck. The Consumer Credit Protection Act limits the amount that a commercial creditor, such as a collector, can garnish from you per pay period.

Judgment creditors can only garnish your disposable earnings. Often referred to as “take-home pay,” your disposable income is the amount you bring home each pay period after taxes and other legally mandatory deductions. Debt collectors and other commercial creditors are entitled to either 25 percent of your disposable earnings or the amount by which your wages exceed 30 times the minimum wage, whichever is less.

Financial limitations on garnishment aren’t the only protective measures in place that benefit consumers. Because processing a wage garnishment each pay period creates additional work for employers, federal law also prohibits employers from firing an employee due to a wage garnishment order.

As problematic as wage garnishment may seem, it doesn’t last forever. The garnishment order remains in place until the debt is paid off or the debt collector’s judgment expires. State laws vary, but most judgments remain valid for seven to 10 years. Some states grant creditors the right to renew an unpaid judgment before it expires. If the judgment lapses, however, the collector loses the legal right to seize your assets. Your employer must then cease garnishing your wages, even if you have yet to pay off the debt.

Most people use banks and credit cards these days, but the fees associated with the accounts can be brutal. There are many ways you can help minimize these unnecessary fees, though. This is Part 2 of our ways to save on bank fees.

Shop around

Just as with any other product or service, you need to shop around to get the best deal for your bank account or credit card. Make sure you read the terms and conditions completely and that you are fully aware of all the possible charges. Sometimes a credit card will waive fees for the first year, but the fine print will alert you to an annual fee for subsequent years. Banks may provide a variety of account types, each of which offers different features or disadvantages. Take time to understand the benefits of each one before deciding to open a new account.

Call your current credit card company

If you already have a credit card, you might want to call your company to negotiate a reduction in the interest rate. Oftentimes a credit company will reduce your rate if you have a good payment history. This can reduce the overall amount you are paying in interest every month.

Pay bills on time

Paying your bills on time will allow you to save money, not only on late fees but also on interest. Whenever possible, use direct debit options to pay your bills on time and avoid these unnecessary charges. To further reduce interest payments, making extra payments, even small ones, can pay down your principal balance faster. Utilize mobile apps to remind you of payment due dates.

Use your own bank’s ATM

Using your bank’s ATM will save you money on fees related to using ATMs elsewhere. Many ATMs located in stores and bars will charge $2 to $5 each, in addition to your bank charging you for the convenience of using another bank’s ATM. As often as possible, use your debit card only at ATMs that are owned by your own bank. Avoid using cash advance options from your credit card to avoid paying fees and expensive interest rates.

Avoid using checks

As much as possible, use direct transfer online or use your credit or debit cards instead of checks. Many banks now charge transaction fees for handling paper checks. This will also eliminate the need to purchase new checkbooks in the future and minimize postage costs associated with mailing checks to companies for bill payments.

There are plenty of ways for you to save money on your banking and credit card fees. The most important thing is to make sure you know all possible fees associated with your accounts and reduce the frequency with which you are charged.

One of the biggest sources of revenue for banks comes from “hidden” fees. These fees are commonly assessed on overdrafts, but there are other ways to rack up charges, depending on the bank.

Many banks aren’t upfront with their customers when it comes to these extra costs, so it’s worth your time to do some research to avoid any surprise charges. Here are five things that you can do to help avoid these fees.

Monitor Your Account Online

Check your bank account at least once a week. Doing so will ensure that you catch any banking errors or other suspicious activities before it’s too late to contest them. There have been cases where someone checked their account activity only to find that their balance was several hundred dollars lower than it should have been. Discovering these mishaps as soon as they happen gives you a much better chance of reaching a solution.

Also, be sure to save your receipts from ATM and debit card transactions until they show up online, just in case you need to dispute something.

Beware of Overdraft Protection

Most banks will automatically enroll you in a “courtesy overdraft protection program”. This protection plan is supposed to save you from having to pay fees incurred by a bounced check or a debit transaction with insufficient funds. But what really happens is that the bank covers for you in the case of an overdraft or bad check, but charges you a hefty fee for doing so. These fees can end up costing you more than the overdraft charges that the bank is “protecting” you from.

Link Your Checking and Savings

One thing you can do to avoid overdraft fees is to link your checking account to your savings. By doing this, you can set it up so that your savings will automatically transfer money to your checking if you buy something without enough money. The downside to this option is that some banks will charge a transfer fee, but they’ll be less costly than the overdrafts.

Take Advantage of Online Bill Pay

The majority of banks offer online bill payment as a free service. You should be able to log on to your account and find a link where you can fill out the necessary information. This may include company names, the amount you want to pay, and whether it’s a one-time payment or recurring. Your bank will then either send the company a check from money they withdraw from your account, or they’ll transfer the payment electronically. Paying your bills online will prevent you from accidentally sending out a bad check. And signing up for recurring payments will ensure that your account balance is up to date.

Talk to a Service Representative

Sometimes picking up the phone and talking to an actual person is all it takes to settle a dispute. Most banks will end up waiving a fee if you call them and contest it. Just tell them how the fee occurred and why you want it to be waived. If it’s the first time you’ve ever received a fee, there’s an even better chance the bank will remove it.

You might also consider getting to know your bank manager. Visit your bank, introduce yourself, and keep in touch. If you’re ever in a predicament where you owe a lot in fees, or there is some other banking matter that needs resolved, your chances of getting help will be much better if the bank manager knows you personally.

Try a Credit Union

Credit unions are owned by their members and they have monthly meetings to discuss how they can improve the member experience. All profits are returned to their members in the form of lower interest rates and reduced or no fees. In addition to having lower fees, credit unions often offer loan products to people with less than perfect credit; their guidelines don’t necessarily follow those of the big banks. Credit unions offer online banking and bill pay, and have a wide range of loan products: mortgage, credit cards and auto loans.

View Part 2 of our ways to save on bank fees.

As higher education costs soar outside the reach of the average middle class family, student loans are becoming an increasing necessity. Once you finish your academic studies, the loans loom over you and become a source of overwhelming stress. But before you curl up in the fetal position and choose to ignore your new shackles, take a deep breath and follow a few basic steps to get control of your debt.

1. Take stock of your loans. Review how many you have, what the interest rate is for each, and how much debt you have per loan. Set up your own records to track your payments and balances, using a tool like Excel or Google Spreadsheets, so that you are not relying on your loan companies to be your record-keepers. If a discrepancy or dispute ever arises in your account, you need to be able to refer to your own records. If you haven’t already, set up your online account with each loan company and consider connecting it with a personal finance service like Mint to help you track your payment progress.
2. If you do not yet have steady employment, or you are in other tough financial straits, reach out to your loan company to rework your repayment plan, apply for forbearance or ask for a deferment. Be prepared to do this any time during the life of your loan when you are unable to pay for any reason. Ultimately, lenders want to be paid back, and they will do what it takes to keep you from defaulting. They will help you navigate your limited finances to find a payment schedule that works for you. If you lose your job, have a financial emergency that drains your assets, or run into other problems, let your loan company know immediately and try to work out a deal until you can resume the full minimum payments again. Never skip payments without reaching out to your loan company, since this can ding your credit score.
3. If you are employed after graduation, create a loan road map for yourself, complete with goals, and stick to it. Consider how much time it will take to pay off each loan and add this estimate to your loan tracking tool. Set milestones to help motivate yourself along the way.
4. Prioritize loan payoffs. The highest priority should be given to either your smallest loan or your highest-interest loan. Choosing your smallest loan will mean paying off one loan more quickly, resulting in the satisfaction and motivation that comes with being free of one of your debts. Choosing your highest-interest loan will mean paying less money in the long run, since it will prevent as much interest from accruing; but depending on how large this loan is, it could take much longer to pay off. Whichever method you choose, be sure when you submit additional payments on this loan to specify to your loan company that it should apply the money toward the principle. Otherwise, the extra money is likely to be applied in the way most favorable to the loan company, for example, toward the following month’s payment or only toward the interest accrued on the loan.
5. Supplement your income. It can be difficult to make ends meet while also paying off your loans, especially if you’re putting extra payments toward one of your loans. Consider your skills and how you may be able to leverage them to supplement your income. You could create a monetized blog or YouTube channel, set up a shop on an e-commerce site like Etsy, do work online, or pick up a second job. Even if you are working at minimum wage, paying off the principle of a high-interest loan with your wages will mean saving yourself much more money in the long run. Paying $10 toward a loan today could mean having $15 extra in your pocket in a few years.
6. Delay investing and major purchases. Plan on having an emergency savings fund to serve as a safety net if you have a financial emergency or lose your job. However, hold off on any major savings, investments, and major purchases like a house or a car, which will cut into your ability to put as much money as possible toward your student loans. Because loan interest rates are almost always higher than interest rates on savings accounts and investment portfolios, paying your loans quickly will usually save you money. The one exception to this rule is if your employer matches contributions to your 401(K); in this case, max out your employer’s match if you can, but don’t exceed it.

As you begin your new life after graduation, don’t make the mistake of letting your student loan debt overwhelm you into inaction or complacency. By seizing control of your debt early–even if that means applying for deferment or forbearance due to financial hardship in the short term–you can be smarter and more strategic about freeing yourself from debt in the long term.

With a debit card, you can make a purchase in real-time using money in your checking or savings account. If thieves gain access to your debit card number, they can use it to make unauthorized purchases or withdraw cash. Thieves gain access to account numbers using the debit-card processing equipment of legitimate retailers. They do so by placing a “skimmer” on debit-card processing equipment, which records debit card numbers and personal identification numbers, or PINs. You can lower the risk of falling victim to this crime by implementing a number of countermeasures.

1. Review Bank Account Activity to Identify Inappropriate Charges

Debit card issuers provide a monthly statement to debit card holders so customers can review their debit-card transactions frequently. To minimize your possible liability for unauthorized card transactions, review the debit card activity on your statement and validate each entry. If you detect an inappropriate entry, contact the card issuer promptly, ask for a refund and request the company’s help in resolving the issue. If the card issuer fails to resolve the issue promptly, the Better Business Bureau might be able to offer assistance in resolving the situation. Also, if you are a victim of fraud, contact the Federal Trade Commission. But if you are a victim of Internet crime, contact the Internet Crime Complaint Center.

2. Respond to Email Only If You Initiated the Contact

Because the Internet grants a criminal anonymity, it’s difficult to determine the true origin of unsolicited emails. While unsolicited email might have been transmitted by a legitimate company, it’s also possible it was sent by a criminal. For this reason, it’s wise to delete unsolicited emails, rather than follow any instructions contained in the message, such as a request for your debit card number by return email. Instead, respond to a company email only if you initiated the contact. Even then, carefully consider the possible negative ramifications of providing anyone your debit card number or other personal information via email. It’s equally important that you refrain from clicking on any link that’s contained within an unsolicited email.

3. Disregard Website Requests for Your Debit Card Number

The lack of knowledge of many individuals regarding the workings of e-commerce make some people vulnerable to criminal actions. For example, criminals may attempt to conduct malicious activities by creating a website that appears to be that of a legitimate company. So when visiting any website, it’s important to ignore requests for personal information even if the website’s design mirrors that of a legitimate company with which you periodically conduct business. You can confirm the validity of a site by comparing the links that are provided within an email to the web address you typically use to access the company on the Internet. If the two are identical, the link provided in the email might be legitimate. But it’s best to substantiate the authenticity of any company request stated in an email by contacting the business and speaking to a company representative directly.

4. Rely on Bank Automated Teller Machines

Federal law enforcement professionals warn states that automated teller machines located at convenience stores and other businesses might pose more risk of debit card scams than do bank ATMs. Banks offer added security measures, such ad surveillance cameras that record the withdrawals from customer accounts, as well as mirrors located near ATMS that alert customers to the approach of others. “Others” include those who might try to steal ATM cards or “shoulder surf” to learn your PIN. In addition, it might be easier for criminals to go unnoticed when installing skimming devices on ATMs located in non-bank locations than in bank locations. For these reasons, it may be best to withdraw funds or make deposits at a bank.

5. Rely on Secure Connections to Transmit Personal Information

Even if you initiate a financial transaction on the Internet, transmit your debit card number and PIN only if you use a secure connection. If a connection is secure, you will see a padlock icon located in the browser window. When you click on the padlock icon, the site will display the details of its Internet security. In addition, a secure webpage address will begin with “https.”

6. Turn Off Computer if Not in Use

Some people activate a computer’s sleep mode if they will be away for an extended time period, preferring not to restart programs and reopen files later, which is required if you shut down the computer. But turning off the computer is best because doing so requires any subsequent user to enter an operating system password. Without the system password, a thief will be unable to access data stored on the computer’s hard drive, which might include banking data such as your debit card number or PIN.

Federal law does not provide the same consumer protection mechanisms against debit card crimes as those afforded to credit card crimes. So it’s important that you protect your finances by taking certain steps when using your debit card. For example, you should withdraw money from an ATM located on a bank’s premises and confirm that a website is legitimate before making an online purchase.

Q.
How do you get a mortgage if you don’t have a good credit score? How do you boost your credit score? How long does it take? I am looking for examples of a minimum credit scores and different types of mortgages that can help people with lower credit scores.

A.
If you have bad credit, you still have some options.

If you don’t have a good credit score, say 620 or lower, you can apply for:

• An FHA loan. The FHA guidelines say that credit scores as low as 580 FICO qualify. The reality is that banks have their own standards, and you will be hard pressed to find a bank that will loan to anyone below a 620 credit score. A 620 score gives you lots of room for error – late pays, collections and even a bankruptcy can appear on your credit report and you will still exceed 620.
• If you’re a veteran, you can apply for a VA loan with low credit scores. There is no minimum score requirement, but the money lent still comes from a bank. Banks are still insisting on a minimum 620 credit score in most cases.
  You can also apply for a hard money loan if you have sizable cash, in the neighborhood of 40-50% down payments on a home. These loans typically come with high interest rates and short loan term (6-12 months)
• You can apply for a conventional loan if your score is 620 or higher, new regulations put into place on December 1, 2014 has had the affect of banks dropping their score requirements from 640. However, it is still difficult to get a conventional loan even if you do have good credit; the documentation is onerous.

If your credit score is low, some fast fixes (results within 30-60 days).

Some long term fixes (1 – 2 years):

• Pay your bills on time. Consider yourself starting with a clean slate and start making payments on time. Negatives, such as late pays become less weighty for keeping your score down for 2 years.
• Most people have their credit get out of hand because they are not spending optimally. Create a budget to make sure you make all of your payments on time. Timely payments will start raising your credit scores after about one year.