Credit experts answer your questions

Experts were at WRAL on Thursday, Nov. 20,  to answer your credit counseling and finance questions.

My husband died three years ago and I have been wondering if it is legal for me to check his credit to see if anyone has been trying to use his Social Security number? He is constantly getting phone calls and junk mail.

You can input his social into the Annual Credit Report Web site to see if it gets a hit. If you are still receiving calls and mail, his social and name are still on a list somewhere. If you find that his social is being used, you may want to contact the three credit agencies to inform them that he is deceased. The contact info for these agencies is Equifax, Experian, Transunion.

I lost my job and can't continue to pay my car payment. The finance company is scheduled to sell my car next month. They told me I will still be responsible for the difference from the sale. If I can't make the payment, will it just go on my credit report or will they take legal action?

Their information is correct; you will be responsible for the remaining balance owed after the sale of your vehicle. They will pursue legal action to acquire a judgment, and the judgment will then be reported to the credit bureau.

How can I get my credit score?

You can go onto any of the three credit agency Web sites to request your credit report: Equifax, Experian, Transunion.

Last year, I received several calls from companies trying to collect a debt from a person with the same name as me. I was polite and cooperative with all callers, and found out that my number had come up based on a name match, but that the SSN on the accounts was not mine. I was told my information would be deleted and the calls stopped. A year later, I was denied credit because my SSN "could not be verified." I found that very strange, so I checked my credit report with the main three agencies. Two of three now have accounts (and the distinctly different Social Security numbers on them) on MY credit report. I now am going through hell trying to get this information removed, as if it is MY fault it's there! How does this happen and why is it legal?

There can be any number of reasons as to how it happened. Mis-keying by an employee or when you tried to correct it your Social Security number got mixed in with the wrong name. I do not have legal expertise to say if it is legal. The best way to try to correct it is to file a statement will all three agencies indicating that you are disputing these items.

 Can you suggest the best types of consolidation loans available? What companies should we look into? What’s the average interest rate for a consolidation loan right now? Our house is paid for, so refinancing our house is not an option.

The best loan option for consolidation would be to obtain some type of secured loan. Most secured loans yield a better (lower) interest rate as compared with an unsecured loan. You should look into a home equity line of credit. This is not a refinance where you will pay closing costs. This loan will place a lien on your property but it will also give you a tax write off. If you are adamant about not using your home, you can visit your local financial institution and discuss what other types of collateral they will take for securing a loan. If there are not other means of securing the loan then your local financial institution will look at unsecured lending. There will be limits to the loan amount and terms with unsecured lending but it may work out depending on the amount of your consolidation.

What can I do to raise my credit score? How can I get a high credit score if no one approves me for credit?

The best way to increase your credit score is to use credit and pay it back in a timely fashion. All you need is one account on your report that is repaid satisfactorily and other companies will start offering you credit. Be careful not to get too extended.

Our credit has been devastated. In September 2001, I was caught up in the corporate debacle and lost my job at MCI/WorldCom. My base salary was $44,000, but with bonuses and incentives, I was making more than $73,000 a year. I accepted temp jobs that lasted 2 to 3 weeks or 2 to 3 months every here and there, but it took me more than 2½ years to find permanent employment. My income was decimated. My husband and I have the worst credit you could ever imagine. I lost all of my 401(k) at MCI/WorldCom, receiving a check from Merrill Lynch for $0.01 after all was said and done. We had to do a hardship withdrawal from my husband's 401(k) and have not been able to re-start the withdrawals. I can't afford to start a 401(k) as I took more than a 60 percent pay cut (going from 73K to 24K) when I accepted this position back in 2004. Since that time, I've been able to recoup an additional 10 percent from annual raises (only 3 percent per year – now at 34K). What do you do when you have nothing? Where can you start when you have no place to begin? We can't even borrow a nickel! We desperately need a second vehicle. But, with our credit scores, which are probably below 400, we don't have a hope and a prayer. In order to borrow anything nowadays you have to have more than excellent credit. We are truly struggling. Our utility bills are all doubled, because we can't afford to pay each within the same month. We pay one when we can, and allow the others to roll over to a double bill. Where can we go to get any type of help or relief?

The first thing I think you should do is contact the National Foundation of Credit Counseling. NFCC is there to help people in your situation. They will help you obtain a copy of your credit report and will help you contact the companies to see what you can do to improve your relationship.

Should I close the accounts of my recently paid off credit cards? I was told I'd lose my credit history, how is that so?

You should close accounts that you are not planning on using again. If the account is an installment loan it closes automatically once it’s paid in full. If the account is a revolving account it will remain open and the credit line will be calculated as “available” credit you have. The “credit history” is not lost on accounts already on a credit report but if you close the account the information is not reported each month. It is suggested to keep one or two of these open for future use.

If you paid someone to clean up your credit and they had everything removed but a fraud alert that's showing on your credit – what can you do to get the fraud alert removed?

The fraud alert indicates that someone else has used some form of your information to obtain credit. You always want to ensure that the financial institution pulling your credit is identifying you as the individual requesting it so removing the alert is not necessary.

I have some things on my credit report that have cause problems for me becoming an homeowner. I moved from an apartment complex and gave them a 30-day notice and they are saying that I owe them. They have also put on my report an eviction. The complex has changed their name also. Can you give advice on what to do?

The first thing to determine is “Do you owe them”? Do you have documentation verifying that you met your obligation to them and you adhered to their policy for moving out? Although the complex has changed names there should be a parent company that has the records from when you were there. The credit report will have contact information for the agency or company that is reporting this information. Obtain a copy of your report at the Annual Credit Report Web site or ask the lending officer you are working with to obtain this information; contact them and dispute the findings if you have proof that you do not owe.

Are the credit card companies that are offering what appears to be a fixed-rate loan a scam? Are there drawbacks?

The best way not to be scammed is to always “read the fine print” before signing your name. Always remember; if it appears too good to be true, it normally is a scam. There are legitimate creditors out there and will offer deals but you need to ensure you know if these are “introductory” offers or permanent.

Are there free counselors who can help you get creditors to reduce you interest rates and/or get rid of costly fees (like over the limit fees, late fees etc.)?

YES. Contact the National Foundation of Credit Counseling online or call them at 800-388-2227. They may refer to one of there local offices but they can help you.

What can I do to get an old credit card debt, for a card that was used by my mother and me, off my credit report?

Is the account paid in full? If yes, contact the credit agency or the company who issued the card and request that the account be “closed”. Once the account is “closed” it will not be reported monthly. Closed accounts usually stay on a report for – 7 years.

We filed bankruptcy (chapter 7) in 2005 and had a foreclosure on a rental property of ours in 2006. We are now having financial difficulties again and would like to refinance our house. We currently have an adjustable rate mortgage that adjusts every 6 months and doesn't have an escrow account. So, it's very difficult with our payments constantly changing and the big property tax bill at the end of the year. But, with our foreclosure, I'm thinking there's no one that will refinance us right now. Is that true? We did get a deal on our house, so we owe less on it than it's worth. And since our credit cards are like 24 percent, I'm thinking if we could re-finance and clear our credit card debt, we would be better off, but I'm not sure we can even do it. What would your advice be? We have about $12,000 in credit card debt and maybe $7,000 in doctor bills.

Acquiring a mortgage loan now may be difficult with your current and previous credit history BUT…it would be to your advantage to get out of the “ARM” you have and to get a loan that requires an escrow account. Was there a deficiency owed after the home that went into foreclosure was sold? If yes, you are still responsible for this debt and it will need to be satisfied prior to new lending can occur. You should contact the credit companies to see if you can get a reduced payment owed without negatively affecting your relationship with them. You should also contact the medical creditors collecting the doctor bills to see if they will do the same. Most creditors/collection agencies are apt to help someone who is willing to pay something.

How can I remove negative remarks that are on my credit? I've never had credit and I started to build it by purchasing a vehicle. I lost my job and the vehicle got repossessed, and I owe like $9,000 to collection agencies. I don't have that kind of money to pay them. They offered me a settlement for half but I will need a down payment of $900 and that is still kinda of steep to come by, what would be your best suggestion to handle this? Please, your help on this would really help. What can I do to rebuild my credit during the process?

Your best option is to come up with the $900 and begin repairing your relationship with them. Once you are on track with them you can show potential creditors that, YES, you had a problem but are taking the necessary steps to correct it.

My husband and I have paid at an accelerated rate on our Mortgage. I'm wondering whether we would be better off paying off our house or selling, moving to an apartment temporarily to keep from loosing any further value in our house...then when market conditions change we would move to something smaller. We were talking of downsizing before the stock went south. Which would be the best way to go? Sell now before the value drops more and rent or pay off the house, stay until the value of the house is back up? I have no idea how long it would take us to recover the lost value in our home. We are close to retirement age, but in no way can we retire financially now.

I think you should stay put. If you try to sell now it will appear you’ve made a profit because of your accelerated payments but in theory you have not. Calculate what your mortgage balance would be if you had not made the accelerated payments and you will see selling now may not be best. The real estate market will rebound. Once it does you can then sell (at a profit) and downsize. Are you still making accelerated payments? YES, I would stop and deposits these funds into a savings account until the stock market rebounds OR invest now that you can buy low.

What is the best way to start establishing credit once you have turned 18 and have a part time job?

Apply for a credit card with a small credit line ($300-$500). If working part time you may need a parent to co-sign but it will still establish credit for you. If you receive the card you should then use it routinely. This will establish a credit history that is reported to the credit agencies.

I recently received notification that my credit card APR was going up from 14.99 percent to 19.99 percent. How do I negotiate with the credit card company to lower the APR? The credit card company did this with no provocation. I do have a balance of $2,500 on a card with a $3,000 limit, but I am never late with my payment. Thank you for your assistance!

The best way to negotiate is to simply ask for a reduction in the rate. Also, at that time, ask why the rate increased. Sometimes rate increases are “in the fine print” when the account was established. The increase may be a result of how you’ve paid other creditors. This company has access to your credit history and can base your rate on your overall credit history with others.

How do you remove an item that has been paid off for over a year from your credit report?

If the account is a “revolving” account (credit card, store charge, etc.) it can show a zero balance but still remain OPEN and available for use. You should contact the card issuer to have the account “closed”. Once “closed” it can remain on your report for – 7 years but it will no longer be maintained.

I received a demand letter from a collection agency in reference to charged off debt. My question is what information should I look for when I ask them to prove ownership of the debt? What information should be included in this package?

You want to see the origination information. Who is the creditor reporting it as a charge off, date the account was opened, whose name and address is showing on the account and whose Social Security number was used to initiate the account?

How do you get an eviction removed from your credit report? I have tried to pay them.

Who did you try to pay? The collection agency who is reporting it on your credit report OR the actual company who turned it over to the collection agency? Once an item is being collected by a collection agency you should deal with them because the company who turned it over to them usually purges their records.

I have $38,000 in credit card debt. My income is less than that per year. I do not know what consolidation company to trust and is that the way I should go with this? I have been contacted by Payless Solutions who want $500 up front and do not guarantee it but will try to get my debt lowered without damage to my credit. Is this possible? What should I do?

Contact {a href="external_link-1"}}the National Foundation of Credit Counseling online{{/a}} or call them at 800-388-2227. They may refer you to one of their regional sites but once you start working with someone they will help you contact each creditor to reduce your interest rate, fees, etc. This organization will charge you a nominal fee but they are legitimate.

We have been attempting to purchase a new car recently and have been getting high interest rates related to the number of inquiries into our credit. We are wondering if we should just wait a couple of months, let things settle down before we buy a new to us car. And, in the mean time, try to pay off the car that we would be trading in so that we are not so upside-down in negative equity. Or would we be better to go with the best we can get now? I'm confused. Thanks

You can actually go either way. Right now is a good time to buy because dealerships are trying to sell off the 2008 cars to make room for the 2009 models. You can take the rate you are given then look at refinancing in a few months with your local institution at a lower rate. The other way to go is to wait; pay down your current auto to reduce the negative equity for the trade. Inquiries on your credit report from auto dealerships should not be affecting your credit score.

We have accumulated a lot of credit card debt and recently renovated so we owe more on the house than it is worth. We can barely make it each month and end up using the credit cards so it seems like a vicious cycle and I do not understand how we will ever make a dent on the credit card debt. We have already cut back on everything and really do not do much extra. What are our options? Should we empty all of our savings to pay it off and start over? It has been suggested we work with credit counselors to reduce the debt but will this hurt our credit scores? I am sure they are not great given the debt. Any advice is great.

I suggest that you work with credit counselors (contact the the National Foundation of Credit Counseling onlineor call them at 800-388-2227) The next thing is to look at refinancing your home. The housing values will rebound and you will probably have some equity to pull and payoff your creditors.

I want to know about car insurance. I have insurance with Nationwide for myself and my daughter. I pay about $2,300 each year for the next 3 years. Is this legal and why are they charging me so much when everybody else in the world knows that we are in a recession. Then they make it so that you can not drop the person you are carrying for the next 3 years unless they drop your insurance. Can you help?

Insurance companies are regulated by the Department of Insurance. Ask your agent for a breakdown of your premium to see if you can cut something to reduce your bill.

My husband bought a new truck for his business, but then went out of business. He feels he has to keep the truck because it is financed at the same bank as our equity loan. We've been trying to sell it since the company went out of business but to no avail. We are really struggling to pay for that truck to the point we are having to choose between food and the truck payment. Is there anything we can do? Any advice would be appreciated. Thank You!

I suggest you contact the financial institution who holds your loans. Speak to a lending officer and ask for advice/help. If you have your equity loan there you have a relationship and they should be willing to work with you to keep your relationship positive. If you sell the truck for a loss you may have enough equity on the loan to payoff the remaining balance.

I have a 2000 Toyota and a 2000 Dodge Ram 1500 with full coverage on both. Both are paid for – what type coverage would you recommend? Currently I am paying $102 a month.

If both of these are on the road you are required by law to maintain liability coverage. I suggest you carry full coverage (comprehensive and collision) on both but maybe look at increasing the collision deductible. The normal collision deductible is $250 or $500. This figure is what you have to pay “out of pocket” prior to the insurance company paying. Since the autos are older models and you do not have a car payment you can increase the deductible to $1000. The higher the collision deductible; the lower the insurance premium.

How do you rebuild your credit when no one will give you credit?

I would contact your local financial institution to see if you can sit down with a lending officer to discuss your current financial situation. They should be able to take a look at your credit report along with your income and help you come up with a plan. If that does not work contact the National Foundation of Credit Counseling online or at 800-388-2227 and see if they can help.

Why do the three credit agencies have such a difference in their scoring? They are not the same. I went to my credit union for a Christmas loan – the score that they got was from a different report than the one I checked. According to Experian my score was high enough to qualify – but the agency they checked with was lower and did not qualify me. Therefore, my loan request was denied.

These agencies usually cover regions across the US. Each agency has their own way of calculating an individual “credit score” but they are normally within a few points. Most creditors that pull a “tri-merge” report (all three) will use the middle score. In the southeast (NC) most creditors use Equifax.

How can you refinance with less than perfect credit because your mortgage is so high that you have to forgo paying this bill to pay that bill from one month to the next including my mortgage? Are there programs to help someone in my situation?

I would contact N.C. Foreclosure Help to see if they can help. You may not be at the foreclosure stage yet but it sounds like you are heading there and this may help STOP it before it starts.

My husband retired from the military in 2005. We bought a house with our VA loan which gave us a great interest rate. Later after having some financial problems we took out a home equity loan for $28,000. We didn't understand it was a revolving line of credit. They were quick to talk us into this loan at 13.9 percent. They won't talk to us about lowering the interest rate because we don't have enough equity in our home (as if we did when they gave us the first loan). Can you give us any advice? Should we just keep struggling to hang on? Thank you very much.

I think you should look into obtaining a new mortgage that will cover the balance of both of your current loans. You may have a great rate on your VA loan but if you average out the two loan your currently have (VA + 13.9 percent on the equity) you might see that a new first mortgage at 7percent – 8 percent may be the best way to proceed. A lender may finance 100 percent of the value of your home as long as you are not pulling out cash to pay other creditors.

I own my company, how do I go about getting credit established in my company name without using my personal Social Security number. Every time I have applied for credit in the company name but they always as for my social and this affects my credit score, making it appear that I am over extended.

The only way to establish “company” credit would be to use your tax id number for the business. If you do not have one then the creditor can only qualify you using your personal information.

My credit card debt has gotten out of control and I am finding it hard to make the minimum payments. What would be my best way to deal with these companies? Should I contact them all or go to a Consumer Credit Counselor? I don't know if the credit card companies would work with me or not. I have used a Consumer Credit Counselor Service and got myself out of that debt but I have gotten myself in a bad situation again. I just don't know which would be the better option. Thanks.

I would use the Consumer Credit Counselor route again.

What is the best method to close an inactive credit card account so that it shows as closed at customer request? Does a phone call suffice, or is it better to write a letter?

It is best to perform both actions. Any time you speak to a creditor on the phone it is best to follow up with a letter to create a paper trail. Just in case!

I am currently on leave without pay from work due to a medical condition. Is there anyway I can save my credit when I cannot pay my credit cards and car payment. Also, if I file bankruptcy can I include college loans in the bankruptcy?

You can request a few months deferment from the creditors until you can get back on your feet. College loans are not included in bankruptcy.

I want to know if closing credit card account that I do not use will help my credit rating. Also, where can I go to get advice as to how to improve my credit rating?

Closing the account may help but only if you have other accounts being reported. The best way to improve your credit rating is to establish a positive and consistent credit history. Use the accounts routinely but also ensure the monthly payment is remitted in a timely fashion.

I don’t have any credit card debt, but I can’t seem to stay current on my house and car payments. I was wondering if there was any place where I could go to get some help on getting this current and help on budgeting my money?

I think you should contact the National Foundation of Credit Counseling online or at 800-388-2227. They have a wide range of services that include budgeting.

Debt settlement is a completely legal, logical, and ethical way to get out of debt. Please Explain.

Debt settlement means that you and the creditor have “settled” on an amount that is less than you actually owe. These accounts are shown on your report with the wording “account was paid through settlement”. This alerts potential creditors that you experienced financial difficulty in the past. It is perfectly legal and it shows that you did make the effort to pay a portion of what was owed. You may be given a higher rate because of this. As you continue to obtain new credit and as time passes these “settlement” account will become less detrimental to your credit rating.

Experts also answered your credit questions on Oct. 1.

For more tips check out Monica’s Money Savers.