Free credit monitoring a boon to homebuyers

Kenneth Harney
Charlotte Observer, 6/29/08

If you're thinking about buying a home or refinancing — even if you've got excellent credit — you may want to avail yourself of a forthcoming free service that could help you get a better mortgage rate.

Under the terms of a national class action settlement, you may qualify for six or nine months of daily monitoring of your credit file plus unrestricted access to your credit report and score. To be eligible, you need to have had any form of open credit account — a charge card, student loan, auto loan or a mortgage — at any time between Jan. 1, 1987, and this past May 28.

Eligibility expires Sept. 24.

The free monitoring services could prove especially useful for homebuyers who need to keep an eye on their credit reports in the months immediately preceding their loan applications. Any glitch, inaccurate negative information, or missing positive information in their files could depress their credit scores.

That, in turn, could make it tougher for them to obtain the best rates in today's market — where lenders are demanding higher credit scores for their standard rates, and often won't touch applicants who have low scores. For homebuyers with minimal down payments, there's a double whammy: Mortgage insurers have imposed strict new minimum credit scores for applicants with less than 20 percent down payment cash.

Here's a quick overview of the class action and how it might be valuable to you. Under the terms of a settlement agreed to by TransUnion — one of the three dominant credit repositories — you can visit a special Web site (www.listclassaction.com) or can call a toll-free number (1-866-416-3470) to register a claim.

The litigation against TransUnion dates back to 1998, when plaintiffs first charged that the company sold consumers' personal data to marketers in violation of federal law. Sixteen class action suits were consolidated into a single case.

TransUnion denied all wrongdoing, but as part of the settlement agreed to create a $75 million fund to compensate affected class members. Since the class was defined as virtually anyone who had an open credit account anytime during the past 21 years, there's a good chance you're a member.

The settlement sets up a tiered menu of remedies for you to choose from, including:

• Nine months of free credit file monitoring services if you agree not to file an individual lawsuit against TransUnion seeking damages. In addition to monitoring — where the bureau alerts you by e-mail within 24 hours of any significant change in your credit data — you can also lock your entire file so that lenders, insurance companies and others cannot access your TransUnion report without your permission.

On top of this, you can receive “unlimited daily access” to your credit report and TransUnion credit score, plus a “suite of insurance scores and a mortgage simulator service” to help you qualify for a better home loan rate. TransUnion estimates the current retail value of this option at $115.50.

• Six months of free credit monitoring, credit lock privileges and unlimited access to your credit report and score. This option, valued at $59.75, allows you to receive a possible cash payment out of the $75 million fund if any money is left over after paying lawyers' fees, notification costs, and priority payouts to named plaintiffs.

• Even if you opt to file an individual lawsuit against the company, you are still eligible to receive six months of free credit monitoring.

One downside for mortgage applicants: The credit score you receive from the settlement agreement will not be a FICO score — which is the dominant score used by mortgage lenders. It will be TransUnion's proprietary score, which may be roughly comparable to your FICO score but sometimes can differ substantially.

The key value of the settlement options is the unlimited access to your credit file, with none of the usual costs. Plus with the monitoring service, you'll be able to spot any monkey business going on in your files, such as unauthorized use of your credit cards or identity theft.

If you're serious about getting a mortgage in the months ahead, this is a rare slam-dunk.

Don't Abandon the Ship (or the Land Barge!)

Auction prices and wholesale values of large vehicles are falling faster than a rock off a cliff. Full size pickup trucks and SUV's are loosing money faster than a compulsive gambler at a crap table. And the experts predict it is only going to get worse.

Ford has delayed the introduction of its '09 F150 by two months, to help dealers move existing inventories of new 08's. The June 23rd edition of Automotive News features an article on page 1 entitled " 'Like House of Cards', Used Trucks Fall." Automotive Re-marketing recently listed vehicles that had the sharpest drop in wholesale values. Is there any good news left out there?

Despite all the "bad" news, there's some good news deep within. Consumers still need larger vehicles, and dealers should not completely abandon these vehicles. Particularly in regard to sub prime customers, some of these folks need a full size pickup or SUV in order to work, and not having ANY of these vehicles on your lot could easily cost you a sale.Now I'm not saying you should stock your lot chock full of V-8's and mammoth trucks, but with these vehicles showing a tremendous spread between wholesale and NADA Trade-in, you may be able to structure deals significantly enough behind book to get a lender interested in the loan.

Lately we've seen spreads running in the thousands between Black Book and NADA trade. The opportunity is there to move some of these units, especially if you can buy them substantially behind book, which is a likely scenario these days.

Keep an open mind when it comes to the"land barges". Stock a few and you'll not only have a vehicle a customer may want and need, but the opportunity to structure a profitable and attractive deal for both the dealership AND the lender!

A New Idea for Limited Credit Customers

This came to my attention just today. With the vast number of customers who have thin or limited credit files, this may help you help them build a file and either create or improve their score.

New Tech Tool Beefs Up Thin Files
Posted by Marcie Belles on May 15 2008 14:24:37 PDT, BankNet360

With so many banks tightening up lending standards, it seems unnecessary for a company to find ways to bring more people into the credit market — especially those with limited credit histories. But Payment Reporting Builds Credit is trying to do just that.

PRBC’s premise is simple: "There are two ways to look at [the credit situation]," said Corey Stone, the Annapolis, Md.-based company’s chief executive. "You can say banks want to lend to fewer people — which is not true — or you can say they want to lend with less risk."

According to Stone, there is a large population of low-risk consumers out there desperately trying to access capital, who can’t because they have "thin" credit files — or no credit at all. In fact, 20% of car-loan applications in 2007 were considered too thin to score, Stone said.

So now PRBC, which got its start in the apartment rental business and has since branched into the mortgage space, is dabbling in auto finance. So far, nearly 100 consumers have secured auto loans using information about rent, cable, insurance, and other typically unreported payments that they reported to PRBC. "Most of the bills we pay come long before we have a credit history," Stone said. "Yet they are all agreements to make regular payments."

Here’s how the system works: A consumer visits the credit bureau’s web site (www.prbc.com) and enrolls in the "Report Builder." From there, it’s up to the consumer to enter his payment history for any bills he chooses to report. After a minimum of six months, the consumer may use the report to apply for a car loan, for instance, provided he verifies the information with proof, like a stack of receipts from the water company. Customers may also opt to have online payments automatically added — and immediately verified — to their profiles. This is all the more handy, since verification is the only cost for users of the site. Users pay $5 to have their personal information verified, and between $15 and $20 to verify each payment account.

PRBC is talking to several national auto lenders about rolling out the project in the direct auto lending environment within the next four to six months, Stone said.

IN MEMORIAM - CHOOCH 10/1/93 - 6-3-08

You'll probably remember Chooch as my Border Collie, the recipient of numerous credit offers and mailers from various sources. Previous post have included several examples that begged the question, "Who's reading your mail?"

We laid Chooch down this morning. Her health had slid dramatically in the last month or two, and she had lost half her weight lately. Chooch had been having difficulty walking the last few days, and had not eaten either. She had been laying in my office, or in her corner of the dining room, and this morning, we took her to the vet to see what was going on.

After examining Chooch, the vet told us that we had come to the point where a decision had to be made. We could get her appetite back, but she probably wound not be able to walk again. After much soul searching, and a good amount of tears, we decided it would be best to allow Chooch a peaceful and gracious ending to her life.

I adopted Chooch from the Broward County SPCA in Fort Lauderdale back in October of 1998. My son and I had gone to look for a dog for me, since he and his mother had gotten custody of the two dogs we had at the time. I had a border collie back in my college days, and Snoopy had lived to the ripe old age of 17 before her time had come. After looking at several dogs, I was unable to find one that I liked, and as we were walking out, I saw a sign on one of the pens that said "Choo Choo, female Border Collie". I asked the aide who was showing us the dogs where this one was, as that was exactly the kind of dog I wanted, and was told that another family was with her and preparing to adopt her. As we approached the door, in came this adorable little black and white hound, and I instantly said, "Don't put her back, I'll take her!" My son and I went out to prepare the paper work, and he picked out a bright red collar for her to wear home. Ten years later, the collar remains, with her license and tag still attached.

Over the years, Chooch has been more of a roommate than a pet. She often slept in the other bedroom, and at times seemed to be a bit of a recluse, but always came out to say hello to a visitor. She enjoyed riding in the car, especially with the window open, and seemed to enjoy the times we took her out on the boat we had in Florida. She was never much of a swimmer, and seemed to have a distinct dislike of the water. In her later years, she would hop when she barked, and Chooch never ceased to be a delight, even lately when things weren't the best for her. She was my companion through the hard times, and I like to think that she may even have saved my sanity, giving me something to care about when nothing really mattered.

I'll be constantly reminded of Chooch, each time her name shows up on the caller ID in my office, or whenever a piece of mail comes addressed to her name. Ten years together seems to have flown by, and I will miss her terribly. God bless you Chooch, and thank you for the best years of MY life!