GreenPath column: Help! Sneaky sis used my credit card and damaged my credit.

Posted on May 13, 2013 by
Jane E. McNamara is president and chief executive officer of GreenPath Debt Solutions, a nationwide, not-for-profit, providing financial literacy through consumer education and counseling for more than 50 years.

Jane E. McNamara is president and chief executive officer of GreenPath Debt Solutions, a nationwide, not-for-profit, providing financial literacy through consumer education and counseling for more than 50 years.

(Editor’s note: Jane McNamara, GreenPath president and CEO authors a credit advice column “Let’s Talk Credit” with www.creditcards.com, answering weekly questions on credit and debt.)

Dear Let’s Talk Credit,

My sister used my credit card without my knowledge. I had stopped using the card and was unaware she was using it. She did not pay on time each month and now that I am trying to buy a house, the late payments are affecting my credit score. (The account is now current). Is there anything I can do to get her activity with my card off of my credit report? — Renee

Dear Renee: Even though you did not use the card, you are still responsible because the account is in your name. The only way to prevent your sister’s negative activity from appearing on your credit report is to report the activity as fraud. This would remove the negative activity, but it would also involve the police and cause obvious legal problems for your sister. You may not want to do that.

You have already started repairing the damage to your credit by making the necessary payments to bring the account current. Even though the late payments are affecting your credit score, mortgage lenders will be looking to be sure you did pay what was owed eventually.

Your credit score will improve as you continue to make payments on time and as agreed each month.  As more time passes, the late payments will have less impact on your credit score. After seven years, the late payments will disappear from your credit report altogether.

Also, consider contacting the credit bureaus to submit a 100-word statement that will appear in your credit report. You can explain that the late payments were a result of your sister using the card without your knowledge. The statement won’t increase your score, but it may help your case with potential creditors.

Another possible option is to hold off on the home purchase for a couple of years to allow your credit score time to bounce back from the late payments. If you are purchasing the home with your spouse, you might also consider applying for a mortgage in your partner’s name only. However, you may not qualify for the home if you apply for a mortgage using only your partner’s income.

Be sure to read all correspondence from your creditors. That will help you identify unwanted use within the first month. You might also consider checking your inactive accounts online each month, or setting up alerts on your smartphone that would let you know of any activity on your accounts.

- Jane McNamara, GreenPath Debt Solutions

Let’s keep talking!

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Give the gift of personal finance this Mother’s Day

Posted on May 8, 2013 by

kids and moneyThe National Foundation for Credit Counseling (NFCC) recently surveyed peoples’ opinions of their mother’s personal finance skills.  An overwhelming majority, 67 percent, saw their mother as either someone who is intimidated by money, views managing money as a necessary evil, or has never managed money.

“Perhaps the ideal gift this Mother’s Day is a lesson in personal finance,” said Gail Cunningham, spokesperson for the NFCC.  “What mothers may not realize is that a lack of financial skills has the potential to negatively impact not only their future, but also that of their children, as negative habits are picked up as readily as positive ones. Mothers have the opportunity to influence multiple generations by improving their own personal financial abilities.”

Consider the following statistics:

•    The NFCC’s 2013 Financial Literacy Survey (FLS) results revealed that most people, 33 percent, learned their financial skills at home.
•    The typical single parent is the mother; therefore the sole responsibility is placed on her to demonstrate and teach sound financial habits.
•    Fewer than half of the states require a course in personal finance for graduation from high school.  Accordingly, only five percent of FLS respondents indicated schools were their main source of personal finance skills.

There is no lack of personal finance education materials.  The bookshelves are filled with financial self-help information; solid advice can be found online, and the NFCC Member Agencies offer free or low-cost education on a variety of topics delivered one-on-one, in a group setting or online.

“It’s never too late to start. The first step is for mothers to take advantage of the opportunities available to improve their grasp of personal finance; then look for teachable moments to demonstrate those new skills to the children,” continued Cunningham.  “After all, the gift of financial literacy is a gift that lasts a lifetime.”

For help finding the skills to become financially savvy, reach out to one of more than 700 NFCC Member Agencies.  To be automatically connected to the closest office, call (800) 388-2227, or go online to http://www.DebtAdvice.org.  For assistance in Spanish dial (800) 682-9832.

The actual poll question and answer choices are below:

Thinking of my mom and personal finance, I’d say she
A.    Is pretty savvy managing money, and enjoys it = 35%
B.    Is intimidated by financial matters, and avoids them = 21%
C.    Sees managing money as a necessary evil, and doesn’t enjoy it = 26%
D.    Has never managed money on her own =18%

Note: The NFCC’s April Financial Literacy Opinion Index was conducted via the homepage of the NFCC Web site (www.DebtAdvice.org) from April 1 – 01, 2013 and was answered by 735 individuals.

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“Let’s Talk Credit” column – Debt pay-off choices: Less now or alot later

Posted on May 1, 2013 by

GreenPath(Recently, GreenPath President and CEO Jane McNamara started writing a column for CreditCards.com on credit and debt issues. The first column appears below.)

Dear Let’s Talk Credit,
I have a credit card balance of $6,500 that I had been making payments on through a debt management program. I had been six months behind in payments prior to going on the debt management program. The card company kicked me out of the program, and I have begun to make monthly payments directly through them. I have the ability to pay in full a year from now or settle by paying 60 percent now. Will settling now be better on my credit score a year from now, or waiting to pay in full?  — Tom

Dear Tom,Most of the damage to your credit score occurred during the six months when you were unable to make payments on your credit card. That negative information will remain on your credit report for seven years from the first date of delinquency (typically no more than 180 days past due — it’s complicated, see the Federal Trade Commission’s 1998 ruling on the topic for more details about start dates for delinquencies).

But, the good news is your credit score will slowly improve as you pay your accounts on time and as agreed. Paying off the card over the next year will be more favorable to your credit score than settling.

However, rather than making the decision based on what’s best for your credit score, I’d rather see you focus on what is best for your overall finances.

For instance, it sounds as if you have approximately $4,000 available to settle your credit card balance. Instead of settling the account, you might consider adding the $4,000 to your savings while continuing to pay on the card.  It is essential to have savings for unexpected expenses.  This would help ensure that you won’t have to accumulate unplanned credit card debt the next time you have unexpected expenses.I’m not sure why the card issuer removed you from the debt repayment program.  If it was because you did not make payments as agreed, that tells me that you probably had unexpected expenses that prevented you from making your monthly payments.

If you don’t already have a monthly spending plan, develop one as soon as possible.  Keep track of all your debt payments and expenses for a month.  If your expenses are more than your income, take a hard look at how you spend your money during the month.  You’ll need to make the necessary cuts to bring your expenses in line with your income. And don’t forget to add at least some money to the plan for your savings.

Good luck to you.  Let’s keep talking! – Jane McNamara

Read more: http://www.creditcards.com/credit-card-news/pay-off-debt-now-later-1582.php#ixzz2S2oSdHc0

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Money Smart Week offers many personal finance programs across the United States

Posted on April 22, 2013 by

kids and moneyIt’s Money Smart Week across the US!

GreenPath Debt Solutions has three special webinars this week and, for our Michigan friends, below are some GreenPath personal finance seminars in Lansing and Farmington Hills. Always free and informative!

At the bottom of this page, there’s a link to help you find a Money Smart Week program in your neighborhood!

WEBINARS – Log-on to http://www.greenpath.org/university/webinars.aspx to sign-up

Wednesday, April 24 at noon - Tips for Selecting and Financing your Next Vehicle

Friday, April 26 at noon – Unlocking the Secret to your Credit Score

SEMINARS – Lansing and Farmington Hills, Michigan

Lansing:
Capital Area District Library – Conference Room
401 S. Capitol, Lansing MI 48933

Tuesday, April 23 at 6 pm – 12 Money Mistakes You Can’t Afford to Make!

Wednesday, April 24 at 6 pm - Options for Dealing with Debt

Farmington Hills:
GreenPath Headquarters
36500 Corporate Drive (12 Mile, east of Halsted)
Farmington Hills, MI 48331

Tuesday, April 23 at 7 pm - 12 Money Mistakes You Can’t Afford to Make!

Thursday, April 25 at 7 pm – Unlocking the Secret to Your Credit Report and Score.

Learn more about Money Smart Week and find an event near you, by logging on to:

http://www.moneysmartweek.org/attend_an_event

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Jumping into the housing market? Your credit report should be your first stop.

Posted on April 9, 2013 by
Sara Gilbert resize

Sara Gilbert, GreenPath manager, CO/WY

Guest column by Sara Gilbert, GreenPath manager for Colorado and Wyoming

Headlines across the country read that the real estate market is making a comeback and many are thinking that now may be the time to buy a home.

One of the most important things you can do if you want to borrow money to buy a home is to improve your credit score. Here are some steps to take.

First, pull your credit reports at www.annualcreditreport.com. If you want to see your credit score, you’ll need to pay a small fee. But without paying a fee, you can still look at and print your credit report from Transunion, Experian and Equifax. Review your reports for accuracy. You have a right to dispute any incorrect information.

Make sure you pay your credit card, mortgage and any loan payments on time. Past-due payments show up as a negative item on your credit report, which you surely want to avoid.

Pay off any collection accounts from that show up on your credit report. Paying these accounts will cause an immediate boost to your credit score. Be aware that the account will remain on your report for seven years past the date that it was paid. But if nothing is owed on the account, it is much less of a concern.

Pay off credit card purchases every month when the bill comes. Make it a rule that you won’t charge things that you can’t pay for in full when the bill comes. Live within your means.

By planning ahead, these simple steps could result in your securing lower interest rate, which could translate into thousands of dollars saved over the life of the loan.

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5 federal housing programs homeowners should know about in 2013!

Posted on April 2, 2013 by

houseAs homeowners receive their annual property assessments and taxable valuations in the mail, many will see the continued drop in the value of their home. Despite recent reports of declining “underwater” homeowners in the fourth quarter of 2012, there are still many homeowners looking for help.

“Property values are starting to creep up in some areas, but many homeowners are still underwater and owe more than their home is worth,” said Rick Bialobrzeski, GreenPath director of communications. “Each week, we talk to hundreds of homeowners who are having trouble keeping up with their mortgage payments.”

The GreenPath Debt Solutions housing department recently compiled a list of five government programs that homeowners should consider reviewing in 2013.

“Education is so important when it comes to housing programs Phone counselor 229x152that are available to homeowners,” said Kathy Conley, GreenPath housing specialist. “If a homeowner can access one of these programs, it can possibly mean the difference between keeping and losing their home.”

Here are the five housing programs, as compiled by GreenPath Debt Solutions.

1. HAMP Tier 1 and Tier 2 – The Home Affordable Modification Program (HAMP) has been extended through 2013 and expanded to help more homeowners.   HAMP Tier 2 is now an option for homeowners who:

•Want to modify a home that is not their primary residence.

•Previously did not qualify for HAMP, because their debt-to-income ratio was 31% or lower.

•Previously received a HAMP trial plan, but defaulted on their trial payments.

•Previously received a HAMP permanent modification, but defaulted on their payments.

Explore details at www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx.  Or contact a HUD-approved housing counseling agency, like GreenPath, for a free assessment of your situation and possible options.

2. Home Affordable Foreclosure Alternatives (HAFA) Updates – This program is designed to help homeowners, whose loans are not backed by Fannie Mae or Freddie Mac, transition to more affordable housing.  HAFA provides two options for transitioning:  a short sale or a Deed-in-Lieu for foreclosure.

In a short sale, the mortgage company lets a borrower sell their home for an amount that falls short of the amount they still owe.  In a Deed-in-Lieu, a borrower transfers the title of their home back to the mortgage company.

New policy changes for HAFA took effect February 1, 2013:

•Servicers are required to make a decision on a borrower’s request for a HAFA short sale within 30 days, down from 45 days.

•If a borrower is 90 days or more delinquent and has a FICO score less than 620, they are considered to have a “pre-determined hardship.”  Borrowers with a pre-determined hardship must execute a hardship affidavit, but servicers do not have to further validate the hardship.

•Non-owner occupied properties are now eligible for short sales.

•Up to $3,000 in relocation assistance may now be available to tenants living in a distressed property.

•The amount the primary mortgage holder can pay to subordinate lien holders has been increased from $2,000 to $5,000.

These changes do not apply to mortgages backed by Fannie Mae or Freddie Mac.  Those agencies no longer participate with HAFA because they have their own Standard Short Sale and Standard Deed in Lieu guidelines.

3. Independent Foreclosure Review Alternative Settlement – In January, thirteen servicers subject to the Independent Foreclosure Review reached an agreement with federal regulators to pay more than $8.8 billion in cash payments and other assistance to help borrowers.  This agreement replaces the Independent Foreclosure Review program, which had not helped as many people as anticipated.  The agreement enacted a broader framework that allows eligible borrowers to receive compensation more quickly.  More than 3.9 million borrowers, whose homes were in foreclosure in 2009 and 2010, are expected to receive cash compensation in a timely manner.

Servicers include Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JP Mortgage Chase, Morgan Stanley, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.

Borrowers whose mortgage loan was serviced by one of the participating servicers and who were involved in a foreclosure action, between January 2009 and December 2010, will receive compensation, whether or not they filed a request for review form. Borrowers do not need to take further action to be eligible for compensation.  Payment agents will contact eligible borrowers by the end of March.

Borrowers who have questions about their eligibility or who need to update their contact information can call the toll-free Independent Foreclosure Review number at 888-952-9105.

4. Fannie Mae Refinancing Incentive – Fannie Mae announced in January that lenders will be allowed to offer a refinancing incentive.  These incentives would be used to obtain a lower payment or move to a more stable mortgage product.

The lender may provide a borrower incentive that reduces the amount of the mortgage loan being refinanced, provided that:

-The amount of the incentive does not exceed $2,000;

-No repayment is required, and;

-The payment is reflected on the HUD-1 Settlement Statement as a lender credit

Or the lender may provide a cash or cash-like (for example, a gift card) incentive that is not reflected on the HUD-1 Settlement Statement, provided that:

-The amount of the incentive does not exceed $500, and

-No repayment is required

5. Hardest Hit Funds – In 2007, the Federal government allocated Hardest Hit Funds to 18 states and the District of Columbia to help homeowners who are unemployed or underemployed.  Many of the states have recently made program changes to help more homeowners.

States have until the end of 2017 to utilize the funds allocated through this program.   To find out more regarding specific Hardest Hit Fund programs in your state, contact the state Housing Finance Agency: www.ncsha.org/housing-help.

Hardest Hit Fund states include Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee and Washington, D.C.

“The main intent is to help homeowners stay in their homes,” said Bialobrzeski. “GreenPath hopes this list will prompt more borrowers to reach out and learn more about their mortgage options.”

GreenPath can assist homeowners by explaining these housing programs and other potential options. Counselors provide pre-purchase counseling for people interested in purchasing a home, foreclosure prevention counseling for people struggling to make their mortgage payment, and reverse mortgage counseling for seniors.  For more information, visit www.greenpath.org or call GreenPath at (888) 860-4167.

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Tax Day looming? Opening a savings account can help you save on that refund!

Posted on March 26, 2013 by

If you are a procrastinator when it comes to filing your taxes, you aren’t alone. According to the Internal Revenue Service, up to 25 percent of all Americans wait until the last two weeks before Tax Day to file their taxes or ask for an extension.tax day

If you are one of those 25 percent, Dorothy Barrick, GreenPath counselor, recently shared some quick tips to save money, if you are receiving a refund this year.

  • The best way to avoid fees for cashing a tax refund check is to open a savings account before you file. Look for a savings account that does not have fees.
  • When you file your taxes, you will get your refund much faster, and it will be more secure, if you opt for a direct deposit of the tax refund into your bank or credit union account.
  • Check with your financial institution to make sure that you can have an automatic deposit into the savings account as this differs from bank to bank.

DON’T BET ON THE POST OFFICE FOR THAT APRIL 15 TAX RETURN MAILING

According to MONEY Magazine, with 80 percent of people e-filing in 2012, the Postal Service has fewer locations open late on April 15. FedEx’s evening hours will be normal, and some UPS sites will delay closing. Search for “private delivery services” on irs.gov to get the IRS mailing address you will need to send your return.

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