Your Questions: NCO Collections and Loan for Operation

Today I get to answer two recent reader questions about collection accounts and getting a loan to finance a medical operation.

Question: I have a debt posted to my credit record for 183.00 in 10/01/2004 by a company called NCO. Problem is I cannot find an address or phone number for this outfit to find out who they are and why they have a debt for me.  I have never been in PA so I am bewildered how they would have anything to do with me. I have lived in ID, WA and OR.  If I had to have something in collection I would think that the company would have someone local that would at least contact the person to let them know they have a debt.  I work for a government entity and the government certainly has to give due process!

Answer: NCO is a very large collection agency based in Pennsylvania. They handle debts for companies across the nation. By law, you should find contact information for them listed on your credit report, or the credit reporting agency should supply it to you upon request. If not, however, you can contact NCO following the instructions on their website.

It is hard to tell at this point what debt led to this collection item. It could be a medical bill that slipped through the cracks, or perhaps it is a debt belonging to someone else. Your first step should be to write a certified letter to NCO requesting verification of the debt. Explain you don't believe it is yours, and ask for details of the original bill. NCO should get back to you within thirty days.

In the meantime, you can also dispute the debt through the credit reporting agency on the basis that you don't believe it is your debt. While it is under dispute it won't affect your credit score.

You can learn more about your rights when it comes to collection accounts by listening to my online radio interview with attorney John Ventura here.

As for the issue of notification before the item is posted to your credit report, I couldn't agree more with you. It's crazy that your credit score can be significantly hurt by a bill you know nothing about. There is a rather weak provision in the Fair Credit Reporting Act that requires some notification by creditors before they report negative information, but it's a general notice and not very effective. The only way that will change is if enough consumers speak up! Complain to the Federal Trade Commission and your Senators and Representative.

Question: I have bad credit and I want to fix it but now. Because I want to do an operation that I have to pay $14,000 for and I can't get a loan. This operation is very important for me. Please help me.

Answer: It sounds like you are in a very tough situation. First, you can learn a lot about improving your credit in the Credit.com Learning Center.You should find the answers to most of your questions about building better credit here, but if you don't, feel free to submit your specific credit questions to this blog. (The more specific you are about the items you are having trouble fixing, the better we are able to advise you.)

Secondly, for the operation you need, I am assuming you are not eligible for Medicaid, Medicare or a private health insurance plan. However, you should make sure you have checked out those options very carefully and ruled them out. Many states also offer health assistance programs, and you can research programs in your state by searching the Internet using terms such as (your state) + health insurance assistance or (your state) + afforable health care.

Next, I would recommend you talk to both doctors and hospitals who could provide your services. Find out whether a payment plan or financial assistance is available. Be persistent.

You may also want to contact your Senators and Representative in Washington. I interned for a Senator during college, and my job was to research constituent problems and try to help resolve them. The service is free and often can be very helpful!

If you cannot get financial assistance, negotiate for a discount if you pay cash (if you do obtain a loan). Shop around to other hospitals if your local one is not cooperative.

A friend of mine recently needed surgery and she does not have health insurance. She was able to get the cost cut by nearly a third by negotiating with a hospital about two hours away and agreeing to pay cash. (The local hospital would not budge on its price.)

While you work on improving your credit, you may want to look at non-traditional loan sources such as friends and family or a private lender.

It's truly a shame that so many Americans cannot afford the health care they need. I hope you are able to find a way to get your operation.

Credit Habit Survey Reveals We Still Have a Long Way to Go

I've witnessed big changes in the credit world since I first started in the industry five years ago. At that time, credit reports and credit scores were still pretty new to the internet and very few consumers really had any sort of understanding of the credit system. Heck, the bureaus weren't even required to allow consumer access to their credit data until Fair Credit Reporting Act in 2001.

Fast forward to 2007, we now have commercials for credit reports on TV, personal finance reporters covering credit in major newspapers and a significant increase in the amount of consumers checking their data. The Equifax credit bureau alone made more than $127 million in revenue in 2006 from their "Personal Solutions" division that markets credit reports, scores and monitoring. Credit reporting has become a huge industry.

So you would assume that consumers are now supremely educated about their credit scores and credit reports, right?  Think again. Numerous surveys indicate that we still have a long way to go. The latest report from TrueCredit found:

• Fully six in ten (63%) do not know their credit score.
• 65% say they have never checked their credit reports for free.
• 47% percent never check their credit reports, and 16% check their credit reports less often than once a year.
• 43% say they have the same amount of credit card debt this year as last, with 11% reporting they have more debt and 29% reporting they have less.

Yikes! I'm not happy to hear that 63% of consumers don't know their credit scores. Especially when this is something that can be easily remedied by ordering a free credit report & score trial or using our free credit score compass tool. Having a general understanding of where your credit score ranks is an important tool for making financial decisions, planning credit improvements and negotiating deals on major purchases.

Checking your credit reports for free? It's a snap through www.annualcreditreport.com. This is the official site  for obtaining your absolutely 100% free, no-strings attached credit report from each credit bureau every 12 months.

And getting out of credit card debt? In most cases, it just takes a willpower and planning to reduce your balances. Credit.com has a Do-it-Yourself Debt Reduction worksheet that can help you get started. With credit card interest rates on the rise, this is a great time to focus on becoming debt free.

What do you think about the TrueCredit survey? Do you know your credit score? Have you checked your credit reports recently? Share your feedback in the comments section below.

When to Blurt Out to Protect Your Credit and Identity

I hate to be that crazy person. You know the type...the one who makes a big stink about something that the rest of us don't worry about. The one who holds up the line. The one who starts sentences with, "Well, actually..." The one who bothers secretaries, administrators and store clerks. But after my experiences working in the personal finance industry there are a few situations that I just have to speak up about:

• Why do you need my Social Security number? This one really gets me fired up. Just last week when I called my doctor's office to make an appointment the receptionist asked me for my full Social Security number instead of my name. I blurted out, "Is that really needed just to make an appointment? That's crazy!" and insisted on giving my name instead. I'm sure the receptionist was rolling her eyes on the other end of the line. I understand that doctor's offices need to have Social Security numbers on file for insurance purposes, but they certainly don't need to use them for simple clerical matters like making an appointment.
• No, I don't want to save 15% by opening a Macy's card. Retail store cards are generally a bad idea. Sure, you'll save a few bucks now, but you'll also damage your credit score with an inquiry and be stuck with the card on your credit report for 7+ years. Plus, retail store cards often come with high APR's and fees. Whenever a clerk launches a hard sales pitch for a retail store card, I start ranting about the downsides. And woe to the clerk who tells me my credit won't be checked for the application!
• Checking your credit report does NOT harm your credit score. I can't even guess the number of conversations I've had on this topic. Cocktail parties, weddings, funerals, business dinners...I've geeked out in all types of social settings when someone mentions that they don't check their credit because they don't want to damage their scores. I don't get why this rumor survives with cockroach-like persistence.

Oh my, I am such a credit nerd! How about you? What situations make you speak up? Share your stories in the comments section below. 

I Will Gladly Pay You Tuesday for a Hamburger Today

The older folks among you will remember this phrase from the Popeye cartoons. The character Wimpy liked hamburgers but couldn't pay for them today, so he would promise to pay in the future, hence the phrase.  Of course, in his case, he couldn't pay for them on Tuesday either so the phrase  came to be associated with deadbeats who wouldn't ever pay.

What interests me more is the concept of the value of things over time.  Frankly, if you didn't have to pay for the hamburger until Tuesday but got to enjoy it today, there is a very small but positive benefit.  That accounts for the "buy it today and make no payments until 2008" advertisements you see frequently.

In a purely rational world, the time difference in value is what you could earn on the money if you had it sooner. With money market funds earning, say, 5% today, you'd be indifferent between getting $100 today or $105 a year from now. 

But that's not the way people act. People place a much higher value on the utility of having money today rather than on Tuesday or a year from now.  In tests, people who are offered a choice between taking $50 today or $100 a year from now, will almost universally take the money now even though they would be earning a return on investment far exceeding the market rate of return.

Conversely, people who are offered $50 in 5 years or $100 in 6 years will choose the $100 option even though this exactly the same deal. It's just delayed by 5 years.

I think that there are many aspects of this phenomenon that are visible in the financial world, two of which I can see easily. First, it appears as if people would rather spend money today than save for the future. We actually have a negative savings rate in this country now.

Second, people are lured by saving money today on upfront loan costs – paying no points – even though the interest savings in the future give them a 25% return on an investment in points. I have a front row seat on this because I explain to my clients the benefit of paying a little more now and saving lots more in the future, a more rational decision. 

This interesting phenomenon even has a name, hyperbolic discounting. You can read more about it at http://en.wikipedia.org/wiki/Hyperbolic_discounting or a number of other interesting sites on the Internet.

I'd be interested in your feedback.

Funny Money Friday: 50+ Facts About Credit Cards

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Jim over at the blog Blueprint for Financial Prosperity has put together a pretty amazing list of 50 fun and interesting credit card facts. It's a must read for any credit geek! Here are a few highlights:

#3 - American Express started off as a shipping company in 1850.
#7 - Visa actually stands Visa International Service Association.
#22 - A fixed interest rate on a credit card can change with only 15 days of notice.
#28 - Ever notice all your credit cards are of uniform shape and size? Their dimensions are governed by the ISO 7810 standard, an international standard for identification cards.
#34 - Credit card numbers conform to the Luhn algorithm, which is just a simple checksum test on the number. What you do is start from the right and double each second digit (1111 becomes 2121), then add them all together, and you should end with a number evenly divisible by ten. If it doesn't, it's not a valid credit card number.
#35 - The first digit of the number is the Major Industry Identifier. 1/2 are for airlines, 3 is for travel/entertainment, 4/5 for banking and financial, 6 for merchandising and financial, 7 for petroleum, 8 for telecommunications. 0 and 9 are for other assignments but you'll likely never see them. If you look at an American Express card, you'll see it starts with a 3, a throwback to their travel/entertainment roots.
#48 - Each direct mailing acquisition costs approximately $80, according to R.K. Hammer, bank card advisory firm.

Pretty fascinating stuff! Here are ten bonus facts I'd like to add to Jim's list:

#51 - Some of the earliest credit cards were shaped like medallions, made out of metal or paper.
#52 - Elvis, Johnny Cash, Donald Trump and Tiger Woods all have credit cards branded with their images.
#54 - Credit card issuers charged off $42.2 billion in debts as a loss in 2005. This is the total unpaid debts that were included in bankruptcy filings or that were unable to be recovered by collection agencies.
#55 - American Express, Discover, MasterCard and Visa lost $1.14 billion to fraud in 2005. The figure doesn't include fraud costs passed on to merchants or from debit cards.
#56 - Visa manages more than 65% of the world's credit card purchase transactions in 2005. Although American Express, not Visa, had the top spot for debt volume per card at $6823.
#57 - The average American household carries between $5,000 and $9,000 in credit card debt depending on which report you review.
#58 - Capital One has a policy of not reporting card limits to the credit reporting agencies. This is most likely done to prevent competition from other issuers and can hurt a consumer's credit score.
#59 - The term "credit card" was first used in 1887 by Edward Bellamy in a book predicting a future where the government dolled out shares of the GDP.
#60 - Credit card interest rates in other countries can be as high as 70% to 120% APR.

Do you have a good credit factoid or piece of trivia? Share it in the comments section below! Maybe we can help Jim reach 100 fun credit card facts. Many thanks to Blueprint for Financial Prosperity for putting together the list!

Survey: What Credit Card Reforms Would you Like to See?

As a personal finance writer, I am having so much fun with the new congress! It's only been a few weeks since the 110th congress took power but already we've seen action on the credit bureau dispute process, health care costs, IRS collection agencies, reverse mortgages, student loan interest rates, health care costs, Social Security number privacy and more. It's hard to keep up with all these exciting new consumer finance developments!

The latest news on financial industry reforms comes from Senator Christopher Dodd (D-Conn.), chairman of the Senate Banking Committee.  Dodd has vowed to investigate credit card issuer practices that are unfair to consumers and has planned a series of hearings. In response to this new scrutiny, other Democrats have been submitting a variety of ideas for reform. For today's survey, share your opinion about which of the proposed reforms you'd most like see come into effect:

Get Free Research Polls

Don't see your ideal credit card reform on this list? Share your ideas in the comments section below!

Free Tax Preparation

If your Adjusted Gross Income was $52,000 or less in 2006, you can have your tax return prepared and e-filed for free, through the IRS's Free File program. So far, over 15.4 million returns have been filed through this program, and according to the IRS, 70 percent of all taxpayers – some 95 million of us – can take advantage of it this year.

The IRS joined forces with several tax software companies in 2003 to make the Free File service available to the public. While some of the companies have specific criteria of their own, the IRS makes it easy to find one that will fill your needs – including a company that will prepare and file your state tax returns for free, too! All you have to do is click here, and Uncle Sam will winnow down your choices to companies that best fit your needs.

Prefer to Eyeball Someone?
You can do that – and still get free tax preparation and filing help. For example:

• If you fall into the low-to-moderate income group (generally, $39,000 and below), you can take advantage of the Volunteer Income Tax Assistance Program (VITA). Trained VITA volunteers are nearby and available to help you. You'll usually find them in community and neighborhood centers, but to find the location most convenient for you, call 800-829-1040.

• Are you 60 or over? The Tax Counseling for the Elderly Program (TCE) gives free tax help to people age 60 and older who are low-to-middle income. Trained volunteers from the AARP and other non-profit organizations can give you free tax counseling and basic income tax return preparation, from February 1st through April 15th. AARP alone offers this service at over 7,400 sites nationwide. Click here to find the one closest to you, or call 800-829-1040.

• If you're in the military, there's a Volunteer Income Tax Assistance Program (VITA) available to you and your family at an office within your installation. No matter what your branch of service, you may receive free tax preparation from people who are trained to address any military-specific concerns you may have (e.g., about combat zone tax benefits). Click here for more information on free tax help for the military.

Would that getting your taxes done for free was the same as not having to pay taxes at all! No such luck, but hopefully one or another of these programs will save you some money. Let us know!

How To Outsmart The Credit Bureaus?

A very cheesy press release came across the wires this morning promoting a book called "How to Outsmart the Credit Bureaus." They should just rename it "How to Outsmart Consumers Out of $16 Bucks." Sure, this type of book has a lot of curb appeal; who wouldn't want to get bankruptcies off their credit reports, remove inquiries or buy a "new Xbox 360?" But, really the whole premise of the book is just wrong. Here is the truth:

There is no way to outsmart the credit bureaus. Or I guess it would be more accurate to say: there is no legal or safe way to outsmart the credit bureaus.

I know this from experience, I used to work for a credit bureau and I've been helping consumers to manage and improve their credit for years.  Just like trying to "outsmart" the IRS or law enforcement, trying to outsmart the credit bureaus isn't a good idea. There is no secret to the credit industry or a special way to beat the system.The rules are pretty simple actually:

Rule 1: Accurate information will stay on your credit report for many years. This is true for positive data like on-time payments and it is true for negative data like bankruptcy filings. There is nothing you can legally do to remove accurate information for your credit report before the set expiration date. You can't outsmart the guidelines established by the Fair Credit Reporting Act.

Rule 2: Inaccurate data is very different from negative data. True inaccuracies such as records that don't belong to you, mistakes in your account reporting and accounts that should have expired can be easily disputed and removed from your credit reports. But negative data, no matter how much you would like to see it gone, can't be disputed and removed before the expiration date.

Rule 3: Make responsible financial decisions and you will have good credit. Make bad decisions and you will have bad credit. Credit reports are designed to evaluate your past financial behavior so lenders can predict your future financial behavior. If you've made good decisions such as keeping your debt balances low and paying your bills on time, you're likely to continue doing so. If you've gone into deep debt, missed payments and had debts sold to collection agencies, you are a riskier borrower. Just like a college transcript or police record, you can't change the past on your credit report. You have to instead focus on the future.

Rule 4: You can't dispute inquiries. Except for a very few limited cases, the credit bureaus will not dispute or remove inquiry records. It is a waste of time, paper and stamps to try to dispute inquiries. The good news is that these records start to lose their impact after just a few months and fall of your report after 2 years.

Rule 5: Any company promising you things like instant credit improvement, secrets the FTC doesn't want you to know about, credit score repair, a 50 point score boost in 30-days, erasing negative records, etc is not a good company. If you sign up for a credit repair program, the best case scenario would be nothing happens. The worst case scenario is that your credit is destroyed, you're broke and you've broken the law.  Credit repair is illegal for a reason.

That's it! Those are the basic rules...pretty boring, right? The real world of credit scores and credit reports is pretty basic. As cool as it would be, there are no hidden secrets or short cuts when it comes to your credit. So please, please do me a favor and avoid offers like this book that promise to reveal the "truth."  The real truth is available for free on sites including Credit.com, myFICO.com, Equifax.com, TrueCredit.com, Fool.com, Bankrate.com and more. Or by just asking our team of credit experts via tidbits@credit.com.   

Collection Agencies and the IRS

The collection industry has been under attack lately. ABC's 20/20 ran a investigative piece on Friday about the seedy world of collections. The upcoming documentary, Maxed Out, has posted a shocking clip showing collectors talking about accessing data and calling customers. And this month, the collection industry is also getting some negative attention from a report by the national taxpayer advocate to Congress.

The collections agency behavior that is driving all this attention is unfortunately nothing new. Private debt collection agencies are notorious for intimidating debtors and defying the consumer protection rules established under the Fair Debt Collection Practices Act. Calling in the middle of the night, threatening consumers making untrue statements about the consequences of not paying debts, I've heard all kinds of horror stories from consumers.

Collection agencies have a surprisingly wide and diverse client list: video stores, gyms, credit card issuers, lenders, landlords, libraries, medical offices and even the IRS. That's right, the federal tax agency can sell your unpaid tax debts to a collection agency. It is a policy that is bad for the consumer and not even profitable for the IRS. According to the national taxpayer advocate, Nina E. Olson, "the IRS collects only about 15 cents on the dollar on tax debts that are two years old and virtually nothing on tax debts that are older than three year."

But there is good news! Based on Ms. Olson's report, the Senate introduced a bill last week that would prohibit the Internal Revenue Service from using private debt collection companies. The bill is called  S.335 and was sponsored by Senator Byron Dorgan from North Dakota, who is my new favorite person of the day.  I can't access the full text of the bill just yet, but stay posted for more updates on this exciting development.

Are You a Spendthrift or a Tightwad?

I am always fascinated when scientists learn more about how the human mind works.  Our lives express a broad range of possibilities. Some of us are more emotional while others are more rational. Some are trusting and some are always skeptical. Some are happy following the crowd while others are stubbornly individualistic. Some are tightwads and others are spendthrifts.

In fact, these differences are what make it fun to be human.  When the differences disappear, life loses its interest. Hollywood's views of totalitarian societies, as in the movie of George Orwell's 1984, are generally filmed in black and white. 

I am always interested in this topic because I'd like to understand better how people make decisions about mortgages or, more to the point, who so many do so poorly at it.  Thus it is with some interest that I read about psychologists who using Magnetic Resonance Imaging (MRI) to see what parts of the brain are activated when people engage in making shopping decisions.

They put people in the machine, give them some money, present them with a series of shopping choices, and see what goes on in their brains.  It turns out that just before someone makes a decision to buy, an area of the brain associated with pleasurable experiences becomes active.

Conversely, when a subject wasn't attracted to the item offered or thought that the price was too high, another area of the brain would become active. That was the same area that would be active if you smelled something unpleasant. By the way, all items in this test were priced well below retail so they all were bargains.

The most interesting thing was that whether you are a tightwad or a spendthrift, it appears that buying decisions are based pretty much on instant emotional reactions.  So much for this careful, rational shopper who gathers all the facts and then makes a well thought out decision.

You can read more at http://tierneylab.blogs.nytimes.com/2007/01/15/tightwads-and-spendthrifts/

Perhaps you would be more interested in seeing how you rate on the tightwads versus spendthrift scale.  To take the test, go to http://www.behavioraldecisionresearch.com/

Have fun!

Funny Money Friday: How Secure is Your Credit Card Data?

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

This week's announcement that a hacker gained access to vast amounts of consumer credit data through TJ Maxx computer systems has everyone thinking once again about data security policies. TJ Maxx hasn't disclosed the total number of consumers impacted, saying only that it is less than a million; but the Wall Street Journal reported that it could be as high as 40 million. And the credit and debit transaction records accessed by the thief go all the way back to 2003. Anyone who shopped at TJ Maxx, Marshall's over the last few years could be now potentially be susceptible to credit card fraud.

Security and privacy experts are saying that the TJ Maxx credit data was most likely not encrypted when it was stolen. Encryption is a relatively easy way for businesses to protect the security of their data from hackers and thieves, however many businesses don't use it since there are no regulations specifically requiring this type of precaution. Credit.com's own security guru recently wrote an article about how companies can encrypt data that should be a must read for any business.

I know that when I swipe my credit card or fill out an online form, that I expect the company receiving my data to adhere to the highest data security standards. I guess that having worked for companies that do take these precautions has spoiled me. Whether it is Amazon.com or my local dentist office: I want my data encrypted, my files shredded, their computers password protected and their offices regularly tested for security.

One company that seems to be going above and beyond is Australian bank, ANZ. They've even created a clever commercial about the security of their credit card division. Click the image below to watch a QuickTime clip of this week's Funny Money Friday spotlight:

I guess that just goes to show that there is always a human element in even the most high-tech security systems! Happy Friday!

Survey: Are you Making Progress on Your 2007 Resolutions?

It's been almost three weeks since the start of the New Year. We've been talking a lot about financial resolutions on the blog during this time. On January 2nd, we took a poll to see what financial resolutions were the most popular this year. You chose boosting savings and investments as your top goal; followed by getting out of debt, planning for a home purchase and improving your credit scores.

Our financial experts have loaded you up with tips and resources, now let's check in to see how you are doing. Have you made progress on your financial resolution for 2007?

Get Your Poll Widget

Are you Still Repaying Debts from a Past Relationship?

A press release came out last night reporting that 29% of consumers have incurred debt from a relationship and continued to pay for it after the relationship ended. The release goes on to try to tie this statistic into some financial tips for buying Valentine's Day gifts. I think they are missing the key point that this study reveals.

It's a very unromantic fact, but it is a statistical truth that most relationships end at some point. And whether it was marriage, living together or just dating seriously, there is almost always a financial repercussion. Shared purchases need to be split up, credit cards unjoined, joint savings divvied...as they say, "Breaking up is hard to do."

For example: I had a friend who broke up with her boyfriend of two years and had to launch a serious financial plan as a result. She had helped him buy a car and pay for college while they were together. After they had broken up, he agreed to pay her back $500 a month and she took on the unwanted role of being a "lender" to her ex. Even though she managed to recoup a lot of her money through this repayment plan, she never quite got it all back.

Cupid is probably frowning on me for talking about separating so close to Valentine's Day, but here are some tips to help you if you are breaking up:

• The absolute most important tips is to separate shared accounts so that your credit report is not going to be impacted by your ex in the future. In most cases this involves closing or refinancing joint financial products. Don't forget about credit card authorized users, loan and credit card co-signers and joint banking accounts. Divorce decrees do not officially separate accounts, you have to work with the creditor or lender directly instead.
• If the separation was not amicable, place a 90-day fraud alert on your credit report. Your ex is probably armed with all the personal information needed to launch a revenge-motivated identity theft attack on your credit.
• Be as fair as possible. The end of a relationship comes with some strong emotions. Don't let your animosity toward your ex lead you to demand more than a fair share. The easiest and fairest way to split everything is 50/50. (Of course, if you are getting divorced instead of breaking up there are a whole new set of rules that apply here).
• Crunch the numbers. If your ex owes you money, don't be afraid to follow my friend's example and think like a lender. Try to set up a payment plan using automatic transfers between your ex's bank account and yours.
• Be prepared to not get all your money back. You may be happier just "writing off" some or all of the debt if it means making a clean break from a bad relationship.

Do you have a financial horror story related to breaking up? Or a tip from your own experiences? Share your feedback in the comments section below.

Please pick up the phone!

I remember calling Capital One last year and finding it absolutely impossible to get a live person on the line to answer my question about my credit card account. No matter which option I chose, I was stuck in voice mail hell. I finally gave up and used their online customer support to reach them. But that doesn't work for everyone.

Case in point: Yesterday my Internet connection went down for several hours. I found a phone number in my old fashioned phone book and called Comcast, my Internet service provider. After pressing numerous buttons to answer questions about myself and my "needs" I got routed to a voice mail message that told me to try unplugging my modem or rebooting (I had already done that). When I chose the option to "press two to speak with a customer support agent," I got the same message again..

I won't bore you with the details, but I finally reached someone hours later, only to discover I needed to call my computer guy in to fix the problem. Although it turned out my connection problem wasn't Comcast's fault -- it was a recent upgrade in my anti-virus software that created the issue -- I wasn't happy that it took me hours of trying to get through to Comcast to diagnose the problem.

What I should have done is found a way around the system. Here are three websites that can help you do that:

• Bypass IVR Cheat Sheet
• GetHuman.com
• NoPhoneTrees.com

Today I decided to try all three to see how they could have helped me with Comcast -- had I been able to get online!

GetHuman and the Cheat Sheet both had the same advice:
Press * at each prompt, ignoring messages. It worked and I got through quickly.

One tip: If you use the GetHuman "Cheat," be sure to click on the name of the company afterward so you can report whether it worked and how long it took to get through to someone.

Small complaint: GetHuman's listings are arranged by category. Comcast is listed under US TV/Satellite but not under Internet, which would be a simple fix. A search field or comprehensive alphabetical listing on the site would be an added benefit.    

NoPhoneTrees.com is operated by a company called Bringo. You find the company you want to talk with, then you enter your phone number and moments later get a verification call. Then you wait for a phone call back to connect you. A half hour later, I am still waiting.

By the way, when I called Capital One recently I noticed they seem to have improved their phone system, relatively speaking. This time I was able to talk directly to someone (after "answering some questions," of course). Still it would be a lot more pleasant if companies took the example of Southwest Airlines and just answered their phones!

Medical Bills and Credit Card Debt

Those of us in the personal finance world have long understood that medical bills are a major driving factor behind consumer debt issues. I can't even begin to count how many emails I've received from people struggling with debts or considering bankruptcy due to bills related to an injury or illness. Without health insurance, consumers can easily build up $10,000 in debt for a simple visit to the emergency room. Even with health insurance, many consumers face incredible deductibles or costs for even basic medical treatment.

A new study from Demos and the Access Project entitled "Borrowing to Stay Healthy" has revealed new data on just how much medical costs are impacting consumer credit card balances. The report found that:

• Low- and middle-income medically indebted households had higher levels of credit card debt than those without medical debt-on average 46 percent higher. ($11,623 versus $7,964).
• Twenty-nine percent of low- and middle-income households with credit card debt reported that medical expenses contributed to their current balances. Within that group, 69 percent had a major medical expense in the previous three years.

The report also goes on to discuss the issue of medical credit cards and revolving lines of credit. These services are often offered to patients as "financial assistance" by health care providers when, in fact, they usually have higher rates and fees than comparable standard financial products.

The group advises a solution that is very close to my own wishes: a requirement to differentiate medical debts from other types of debts in the credit system. I feel very strongly that new regulations should be passed to reform the way medical bills are sold to collections and included in credit reporting. Under the current system, any size of unpaid medical debt can be sold by a health care provider to a collection agency. The resulting collection record causes significant credit score damage for 7 years; damage that doesn't end when the consumer pays off the debt.

It doesn't make sense that a consumer's credit score would drop dramatically because they are unable to repay exorbitant bills for something like cancer treatment. Struggling to repay unavoidable medical bills is a very different situation in my mind than being unable to repay bills for electronics and other avoidable expenses. And, although creditors and lenders would argue against it, I don't think medical collection accounts are a fair or accurate item to use in credit scoring calculations.

Have you recently faced an expensive medical bill? Did you use credit card or other financial products to manage the debt? Share your feedback and stories in the comments section below.

Funny Money Friday: What Should Bob do with $210 Million?

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Home Depot made headlines around the world this week with agreeing to a $210 million severance package for former CEO Bob Nardelli. $210 to quit your job? That is a pretty sweet deal...but at the same time this deal makes my blood boil as an investor. Business Week has the best story about Nardelli and Home Depot that I've read so far.

Mr. Nardelli had worked for Home Depot for only six years and had been embroiled in scandals about his compensation, the company's sluggish stock prices and his decision to replace thousands of full-time employees with part-time employees in Home Depot stores. In 2005 alone, Mr. Nardelli earned $37.8 million which calculates to about $18,000 an hour. Shareholders are now suing to stop the $210 million severance package from being paid out.

Anyways, this is supposed to be "Funny Money Friday" not "Rant About Executive Compensation Friday." So let's suggest some ways that Bob could spend his $210 million windfall:

• He could buy and furnish the world's most expensive home, a $122 million dollar estate in England with five swimming pools and a heated marble driveway.
• He could outfit every room in his new mansion with a 103-inch plasma television encrusted with 20 carats of diamonds for $130,000 each.
• He could surpass the Netherlands $201 million donation to UNICEF, which was the largest single earmarked donation in the organization's history.
• He could buy a fleet of 166 of the world's most expensive cars, the Bugatti Veyron which retails for about $1.2 million.
• He could double the funds that The Partnership for Higher Education in Africa (backed by Bill Gates) has to improve and expand university programs in Kenya, Ghana, Mozambique, Nigeria, South Africa, Tanzania, and Uganda.
• He could outfit himself and all his friends with with Diamond Crypto Smartphones that retail for $1.3 million each.
• He could buy a few pairs of 60 carat diamond earrings from Harry Winston for $8.5 million a pop.
• He could buy Sealand, the world's smallest principality, for about $200 million.
• He could donate life saving vaccines to stop the two top killers of children worldwide, pneumococcus and rotavirus.

What do you think Bob should do with his $210 million? Share your feedback in the comments section below.

Employment in the Mortgage Industry

Record low mortgage rates in 2002 and 2003 powered huge gains in employment in the mortgage industry.  More new jobs were created in the mortgage business than any other industry in the post dot-com era with current employment at over 500,000 people.  When rates started inching up in 2004 we all thought that would come to an end but it didn't happen.

In spite of the prime rate rising from 4% to 8.25%, long-term mortgage rates stayed reasonable. These rates are keyed to long-term bond rates. Analysts usually compare mortgage rates with the yield on the 10-year Treasury Bond. From mid-2003 to early 2006, the 10-year bond yield stayed roughly between 4% and 4.5%.  In early 2006 rates started to rise eventually getting over 5% in mid-year.

But then things started back down again and ended 2006 at about 4.4%.  30-year fixed rate loans were again available below 6%. In the past week, however, rates have started up again. With the Bank of England raising its rates by .25%, the U.S. Treasury 10-year bond yield this morning was over 4.7%.

This is not a good omen for employment in the mortgage business. Ameriquest closed all of its 229 branches. Washington Mutual reported large layoffs and several large firms have closed their doors. Just in my own building, one lender just reduced his processing staff by half.  I expect this to continue as the reports of mortgage applications, while highly volatile, continues well below what the industry has been used to these last few years. Bottom line: we do not need 500,000 people in this industry any more.

So why is this important to you?  A funny thing happens when someone's employment is threatened: he may do desperate things, like forgetting about telling his clients the truth.  In fact, if there were an "Honesty Index," it would be taking a big dive right about now.  I already hear evidence of this from borrowers.

Borrowers always need to be especially cautious about the companies and people they deal with. That is especially true now. Do not just accept verbal statements. Get commitments and get EVERYTHING in writing.

FREE: Expert Retirement Planning Advice

Kiplinger’s Personal Finance magazine and the National Association of Personal Finance Advisors (NAPFA) are joining forces to offer free one-on-one retirement planning advice on their "Jump-Start Your Retirement Planning Days."

Folks who call this toll-free number – 888-919-2345 – on Tuesday, January 16th, and Friday, January 26th, from 9 AM to 6 PM EST will receive answers to their retirement questions from fee-only financial advisers. There will be no cost to callers, even though the advice they receive will come from pros who normally charge between $100 to $250 an hour. (On past "Jump-Start Your Retirement Planning Days," over 25,000 people received more than 4,000 hours worth of free financial advice.)

The fee-only financial planners who belong to NAPFA don't earn commissions for recommending products or services – and they pledge to put their clients' needs first when offering advice. Therefore, most personal finance authorities recommend them over planners who can benefit personally from the advice they give.

Mark Your Calendar and Pick a Topic
To jump-start your retirement, why not plan to give a call on January 16th or 26th? You might want to ask about one or another of these topics:

• The latest IRA and 401(k) regulations.
• Estate planning.
• Insurance.
• Taxes.
• The amount to save for a comfortable retirement.
• The ways to cope with competing goals, such as saving for retirement vs. saving for college.
• Target-retirement funds (aka life-cycle funds), which allocate the stock/bond/cash ratio in portfolios based on when the investors will be retiring.
• Reverse mortgages.

Prepare Yourself
Choose one of these topics, and then do a little reading on it during the next week. That way, you'll have a leg up when you call the retirement planning hotline. Here are two good places to start:

1. Kiplinger's already has its February, 2007 cover story,  "Retirement Savings Made Easy," available for free on its Web site.
2. Credit.com offers a lot of free retirement advice and tools.

Check them out before you call!

Details, Details.
The more detailed the information at your fingertips when you call, the more personalized the answers will be. Kiplinger's recommends, "If you want to ask about your investment allocation, for example, you'll need to give the planner a quick overview of how your portfolio is invested." Similarly, if you've been automatically enrolled in the 401(k) plan at work, and you have some questions about it, make sure you have the paperwork handy when you call.

Important: The "Jump-Start Your Retirement Planning" hotline is free to all. You don't need to be a Kiplinger's subscriber to benefit.

What are you doing to jump-start your retirement? Discuss it with us here, and don't forget to call the experts on Tuesday, January 16th and Friday, January 26th, between 9 AM to 6 PM EST, at this toll-free number: 888-919-2345.

New Year's Resolution: Improve Credit Scores

The fourth most popular choice from our New Year's Resolution Poll is "Improve Credit Scores" with 13% of the votes. Along with getting out of debt, preparing for a home purchase and boosting savings; working on your credit scores is an excellent goal for 2007.

Credit scores impact the rates you'll receive on not just credit cards and loans, but also for auto insurance, homeowner's insurance, cell phones, utilities, cable TV and more. Even if you are not in the market for a new credit card or a mortgage in the next few years, you can still benefit significantly from having good credit scores.

The first step is to know where all three of your credit scores stand and how you compare to the rest of the country. Currently, FICO reports the median credit score in America as 723 and Experian claims that the average score in the US is around 675. In order to qualify for standard rates you need a credit score above 700. And for the best rates available, you want a score well above 750.

Unfortunately, improving your credit score isn't necessarily a simple task. There is no "quick fix" when it comes to credit but there are a lot of  tips that can help:

• Check your credit report for inaccuracies. One of the easiest ways to improve a credit score is to remove inaccurate negative records from your credit report. This could include records that don't belong to you or that are expired. It's important to check that the record is in fact inaccurate before you dispute it. This guide to correcting your credit report can help you get started.
• Improve your payment history. Your payment history counts for 35% of your credit score. Late payments, especially over 90-days late, can cause big damage to your credit scores. You can read more about improving in this category online here.
• Reduce your debts. Your debt-to-credit-limit ratio counts for 30% of your credit score. Aim to carry balances that add up to less than 10% of your total credit limits for the maximum score benefit. Read more about improving your credit score by reducing your debts here.
• Improve your account mix. Having a healthy balance of credit and loan accounts can give your score a boost. This factor accounts for 15% of your credit score. You can read more about improving your balance of accounts online here.
• Work on your credit age. Having a long history of responsible credit use shows that you are an established borrower and this factor counts for 10% of your credit score. Make sure you don't close any old accounts on your credit report for this reason. Read more about your credit age online here.
• Avoid unnecessary inquires. Apply for new credit in moderation and only when you are certain that you want the account. The number of recent inquiries on your credit report counts for 10% of your credit score. Read more about managing your applications for credit online here.

Is credit score improvement one of your resolutions for 2007? Share your questions or tips in the comments section below. Or you can send a question to our credit scoring expert, John Ulzheimer, at askjohn@credit.com.

New Year's Resolution: Get Out of Debt

Voting continues in our New Year's Resolution Poll and a new goal has overtaken "Prepare for home purchase" for the second place position. As of this morning, "Get out of debt" was the number two resolution with 21.7% of the votes. "Boost savings & investments" continues to dominate the top resolution spot.

Let's talk about debt reduction a bit. It is a really excellent financial resolution for the New Year. Especially considering that the average household carries around $9,000 in credit card debt alone these days. Add in student loans, auto loans, electronic loans, mortgages and other debts; it's no wonder that 43% of Americans are spending more than they earn each year.

Getting out of debt can seem really overwhelming and a lot of consumers use that as an excuse to ignore their debts or not face the issue head on. The most important step toward getting out of debt is often the hardest: simply taking a hard look at what you owe.

The best way to get a complete debt picture is to print out all your credit reports, loan documents and credit card statements. Write down the balances, interest rates and minimum payments for each account on a piece of paper. Once you have those totals, you can work on making a monthly spending plan that will allow you to pay as much as possible toward reducing your balances. Pay the minimums for each account and put the remaining money you alloted toward the debt with the highest interest rate and the highest balance. Continue this each month until that first account is paid off and then move on to the next highest rate/balance account. You can read more about this do-it-yourself debt reduction program online here.

These basic instructions work for most borrowers who have a somewhat manageable amount of debt to repay. Willpower is really the key to making type of debt reduction plan work for your situation. If you have credit card balances over $10,000 or debts that you simply can't manage, you may need to seek out a different solution. Here are some tips and links that may help:

• Request a free debt consultation. Credit.com's team of customer service representatives can help point you toward a debt solution that fits your needs. Either fill out the online request form or call 877-273-4273 toll free. Debt counseling programs, debt negotiation services and consolidation loans can all be solutions for borrowers dealing with specific types of serious debt issues.
• Transfer your credit card balances. Transferring your credit card balances from a high interest rate account to a low or 0% APR credit card can be a great way to save on interest while reducing your debts. However, there are a lot of hidden catches that could make this move a bad idea. Be sure to read all the terms and conditions on the new account before transferring the debt. Some accounts will charge expensive fees for the privilege.
• Negotiate with your creditors. An alternative to transferring balances is to call your creditors and negotiate a lower interest rate. If you've been a good customer in the past, you have a lot of sway when it comes to hammering out a deal with a credit card issuer. Don't be afraid to ask.
• Understand collection accounts. Collection accounts are different than standard credit and loan debts. These negative records will remain on your credit report for 7 years, whether or not you pay them off. If you are dealing with collection records, read this article before taking any action.
• Consolidate or refinance. Depending on your financial situation, consolidating student loans or refinancing an auto loan could help you save a bundle. You'll reduce your monthly payment and possibly your interest rate in both situations, but you'll also extend your loan term and increase the overall cost of your debt. Weigh these pros and cons before deciding to consolidate or refinance.
• Remember the credit score impact. Your debt-to-credit limit ratio is a big part of your credit score calculation. Debt balances adding up to more than 30% of your total credit limits can cause some major damage to your credit scores. Aim to have credit card balances below 10% for the maximum credit score boost.

Want more information? One of our CreditBloggers.com personal finance experts, Nancy Castleman, recently published an excellent article called "Make Reducing Debt your New Year's Resolution." And as always, we welcome your comments and questions either in the feedback section below or by email at tidbits@credit.com.

New Year's Resolution: Plan for a Home Purchase

The second most popular choice in our New Year's resolution poll is about preparing for the world of real estate and mortgages. As of this morning, more than 19% of you chose "Plan for a Home Purchase" as a top resolution for 2007. And no wonder: With home prices softening and mortgage rates still very low, this is a great time to consider buying. Here are some resources and tips to get you started on your home buying resolution:

• Start with the basic. Credit.com has a free Home Buyer Boot Camp article that outlines the whole process from real estate agent to inspection in five steps.
• Work on your credit. Your credit scores play a big part in mortgage underwriting. Scores over 700 will help you get the best deal available. All three of your scores will probably be checked, so it makes sense to know where you stand before you apply. If your scores need a boost, you should start about 3 months before your application and follow these steps.
• Find a real estate agent.   Your agent should be a trusted partner during the home buying process; take some time to find one you really like. We've put together a list of good questions to ask a potential realtor and this free real estate agent finder tool can help you compare rates.
• Compare mortgage options. A good broker can help you pick the loan that works best for your situation, but it makes sense to read up on the different types available on your own as well. Read about the most common types of mortgages.
• Reduce your debts. Mortgage lenders will look at your debt-to-income (DTI) ratio as part of the underwriting process. Aim to have this ratio well below 30% to qualify for the best deals. You can read about improving your DTI and loan-to-value ratio online here.
• Ask questions. Don't be afraid to ask a lot of questions during the home buying process. A good real estate or mortgage professional should be glad to provide you with answers. Credit.com's mortgage expert, Randy Johnson, has years of experience as a broker in southern California and loves helping consumers. You can read his articles online here or ask him a question directly at mortgageguru@credit.com.

Questions or tips about buying a home in 2007? Share your feedback in the comments section below.