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Author: akbrewer Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308226  
Subject: Consumer Credit Counseling Service Date: 10/12/2000 2:08 PM
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Does anyone have any experience with how going through a CCCS affects your credit. I am considering going through MYVESTA. They stated it is a neutral mark on your credit report. I have heard mixed stories. Has anyone gone through one and it negatively affected their credit to borrow money in the future? Thanks.
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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46729 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/14/2000 11:10 AM
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MYVESTA is not CCCS is it? CCCS is a particular outfit, not a generic name for any credit counseling.

xtn


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Author: akbrewer Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46802 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 8:17 AM
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Does their service have any affect on your credit reating?

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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46808 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 10:53 AM
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Does their service have any affect on your credit reating?


First off let's seperate "credit report" and "credit rating". These terms are not interchangable. Your credit report contains information about your credit accounts and payment history, among other things. Your credit rating is, of course, determined by any potential lenders when they look at your report. They use the information in your report to "rate" you according to their own criteria. Your report itself is not a rating of any kind.

That being said, let's talk about what might happen if you use CCCS's repayment plan. Creditors who are negotiated with may very well report such activity onto your record. They might change the status of the account. Remember that any payments over 30 days late might get reported too, so you want to make sure that CCCS doesn't hurt you further with poor planning where the payment schedule is concerned.

So how can this effect your rating? Depends on how a potential lender evaluates your report. If they see many accounts with a notation on them like "Paid as Negotiated" or something like that, at the very least they will know you haggled your previous creditors down on their money. Will they think badly of that? Or will they see the good side of the story that you took care of your business rather than letting it default? Who can say?

Personally I don't see any value in the services offered by CCCS. They don't do anything you can't do yourself, except perhaps cut a better deal on interest rates. You give up control though. You put someone else in the driver's seat of your financial situation.

xtn


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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46811 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 12:10 PM
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Your credit rating is, of course, determined by any potential lenders when they look at your report. They use the information in your report to "rate" you according to their own criteria. Your report itself is not a rating of any kind.

The broad-based risk credit bureau score is calculated by the credit bureaus, not lenders. How it is affected by using credit counseling services is a secret.

Finally, there is a widely accepted way to determine what is "good credit" and what is "bad credit"-- but even the score, itself, is a secret.

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Author: johnmoni Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46813 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 12:33 PM
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"Finally, there is a widely accepted way to determine what is "good credit" and what is "bad credit"-- but even the score, itself, is a secret."

You point is well taken, but what about adopting a lifestyle that obviates the need for credit? Then the idea of "good credit" and "bad credit" becomes irrelevant.
johnmoni

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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46814 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 12:36 PM
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The broad-based risk credit bureau score is calculated by the credit bureaus, not lenders. How it is affected by using credit counseling services is a secret.

Finally, there is a widely accepted way to determine what is "good credit" and what is "bad credit"-- but even the score, itself, is a secret.



Of course we don't know if and to what degree the previously mentioned changes on one's report will effect one's FICO score.

It remains that potential creditors evaluate your report and these scores by their own criteria. Some lenders my go only by the FICO score, some may consider it along with other information, and some may not take it into account at all.

xtn


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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46822 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 2:05 PM
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You point is well taken, but what about adopting a lifestyle that obviates the need for credit? Then the idea of "good credit" and "bad credit" becomes irrelevant.

Automobiles are irrelevant to me because I found alternatives (cycling, public transportation, and mailing things rather than showing up in person to deliver or retrieve them). But for those who choose to drive, their questions about auto repair are still relevant-- even though they could choose not to drive, as I do.

The people on this message board (entitled "Consumer Credit/Credit Cards") are not necessarily so stupid as to think that they HAVE to have a credit history; they understand that living on a cash basis would eliminate the need for it. However, they have chosen to use credit as a tool to get what they want sooner, and it is a legitimate and popular lifestyle. They're not all heirs to large sums of money. Some make $35,000/year, have 2 children, and would like to have a house they can call a home in the right school district this year, rather than waiting ten years to accumulate a $20,000 down payment so their children are 16 and 14 when they move.

The notion of living without purchasing on credit seems odd for most in industrial and post-industrial society. There is nothing wrong with wanting good credit. Isn't good credit a powerful tool for a person living in the year 2000? Isn't the desire for a good credit report a normal desire? Doesn't it make sense? Are there still imperfect people in the world-- who didn't start squirreling away dimes when they were 12?

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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46825 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 2:19 PM
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Some lenders my go only by the FICO score, some may consider it along with other information, and some may not take it into account at all.

So, the level of use, it seems, is in question.

In his testimony in a hearing before the House Banking Subcommittee on Financial Institutions and Consumer Credit, September 21, 2000, Senator Charles E. Schumer said, "Currently, nearly 80% of all mortgage loan decisions use the credit score as the primary determinant of those decisions."

That's a lot.

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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46835 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 3:45 PM
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GregFisher -

The qoute by Senator Schumer serves to reinforce my point, which is that there are variables and that one's report is not by itself always an exact prediction of how a potential creditor of any type might "rate" how eager they are to lend you money.

Does Senator Schumer refer to one's FICO score? I know, for example, that I would consider a lot more information that just one's FICO score if I were interviewing prospective tennants. The original poster asked how their credit rating might be effected by using CCCS's repayment program. I merely wanted to establish that one's milage may vary depending on the situation. If the poster had inquired how their FICO score would be effected I would have answered differently.

xtn


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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46839 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/16/2000 4:16 PM
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Does Senator Schumer refer to one's FICO score?

I, too, like specifics and direct quotes-- as opposed to the usual generalizations and rhetoric used in the discussion of credit scoring.

It is readily apparent that Schumer refers to the FICO score, without calling it by name. Why not use the name? Because there won't be a law that mentions "FICO." Yet, that is the score that brought about the hearings. And, Fair, Isaac was the only scoring company who testified that day. You can't have your cake and eat it, too.

He talks, at length, about the effect of THE score on the cost of home mortgage loans. If it isn't the Fair, Isaac broad-based risk credit bureau score, which one is it, then? I agree with him that "this is a pointless and outdated mystery that only confuses consumers and costs them money." This thread is a perfect example of that type of confusion.

http://www.house.gov/banking/92100sch.htm

But, let's go to the text of the proposed law:

It defines the credit score as "a numerical value or categorization derived from a statistical tool or modeling system used to predict the likelihood of certain credit behaviors, including default... "

and excludes "any mortgage score or rating of an automated underwriting system that considers 1 or more factors in addition to credit information, including the loan-to-value ratio, the amount of down payment, or the financial assets of a consumer... "

If passed, it would compel the credit reporting agency to disclose to the consumer "the current, or most recent, credit score of the consumer that was previously calculated by the agency... "

http://thomas.loc.gov/cgi-bin/bdquery/z?d106:s.03063:

The Fair Credit Reporting Act (the law that the legislation would change) regulates credit bureaus, not lenders (and their scores). In other words, the senator is referring to credit bureau scores, not lenders' scores by proposing to change that specific law.

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Author: xtn Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46881 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/17/2000 2:13 AM
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GregFisher -

Your posts on this matter have surely been insightful to the original poster, as I hope mine have been. From our discussion the poster should have a pretty good idea about how the system can effect his/her "credit rating". Regardless of if the poster was seeking to learn about CCCS's effect on his/her Fair, Issac score or on the final aproval of a credit application, he/she probably learned something.

xtn


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Author: johnmoni Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46908 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/17/2000 12:17 PM
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"Isn't the desire for a good credit report a normal desire? Doesn't it make sense?"

Greg,
You and I agree 100% - but your missing my point. All I'm saying that by adopting a LBYM/cash only lifestyle the credit rating becomes irrelevant, and I should have gone on to say that by default, your credit will automatically be good. Its simple - If you save your money, than you'll qualify for any loan you need, because the actual loan amount will be small.

"The notion of living without purchasing on credit seems odd for most in industrial and post-industrial society."
Not sure why you say this. I know lots of people who live on a cash only diet. My main point is, and will continue to be, you don't need to fall for the myth that you need to "establish credit." It is possible to live without it - a fact that the credit industry would rather we not understand. This board is a perfect place to dispell that myth. As always, I appreciate and respect your passionate views.
johnmoni

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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46928 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/17/2000 2:01 PM
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You and I agree 100% - but your missing my point.

Neither is true.

Saving money for a house down payment is noble and smart, but, as John Maynard Keynes said, "In the long run, we're all dead."

I know lots of people who live on a cash only diet.

Last week you said:

"I qualified for a mortgage without ever having an auto/personal loan, and always paying my CC bills in full/on time (have never paid one cent of interest charge in my life.) Why? Because I had a steady employment history, never paid a recurring bill (utilities, etc.) late, and saved a "decent sized" downpayment for my mortgage (with an average middle-class income.) By credit industry standards, I shouldn't have qualified for the loan, because I never had "credit." Despite that, I was qualified for the mortgage in a few days."

(post 46396)

So, you're not one of the ones who live on a cash-only diet. Why not? Is it because by using credit you were able to get the house sooner than if you had to save the entire amount? Did the lender check your credit report when you got the mortgage loan? Were there entries on the report for the CCs? If your CCs were on your credit report, how is it that you never had "'credit'"? That doesn't make sense and sounds inaccurate. If you will answer those questions, we can continue.

Isn't the desire for a good credit report a normal desire? Doesn't it make sense?

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Author: johnmoni Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46965 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/17/2000 6:08 PM
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"So, you're not one of the ones who live on a cash-only diet. Why not? Is it because by using credit you were able to get the house sooner than if you had to save the entire amount?"
I'll clarify. Cash only meaning using a credit card for only those expenses that I/we can afford to pay for cash, and paying the bill in full, every month. OK, I used a bit of literary license - we live by a cash only (as defined above) except for our mortgage. The goal still is to pay the mortgage off in full ASAP, and we'll never have another mortgage again for life - guaranteed.

"Did the lender check your credit report when you got the mortgage loan? Were there entries on the report for the CCs? If your CCs were on your credit report, how is it that you never had "credit"?"
I stand by statement that by industry standards, I/we didn't have "credit" because we pay our bills in full every month, and never had any other kind of loan (before the mortgage). I understand that the CC companies look at folks like us as trouble because they don't make a dime from our accounts - no matter how you slice it, paying the bill in full isn't credit to me.

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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46987 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/17/2000 8:50 PM
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I'm going to assume that the answer to the question, "Were there entries on the report for the CCs?" is "Yes."

Merely having a credit card that is listed on one's credit report is a factor in credit scoring (one of the specific factors is "Number of bank revolving or other revolving accounts" -- see http://www.casselfinancial.com/credit/creditscore.htm ). In fact, that's what the big hubbub is in Washington, right now. Senator Schumer: "To this day, most consumers have no idea that simply by having too many credit cards they could ruin their credit score."

Your premise that one does not need credit report tradelines to be approved for loans may be true, but your experience does not prove it.

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46989 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/17/2000 9:14 PM
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I stand by statement that by industry standards, I/we didn't have "credit" because we pay our bills in full every month, and never had any other kind of loan (before the mortgage).

Sorry, the credit card account established your credit. The credit card account appears on your credit report. The "pays as agreed" appears on your credit report. Your credit limit probably also appears on your credit report. The highest balance for 3 months or for a year, even though it was paid off, could very well also appear on your credit report.

You did establish your credit worthiness with your credit card.

Credit card companies might not like it that you pay the bill in full every month, but faithful payments is exactly what mortgage companies look for.

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Author: WLonsdale Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 47025 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/18/2000 11:48 AM
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Sorry, the credit card account established your credit. The credit card account appears on your credit report. The "pays as agreed" appears on your credit report. Your credit limit probably also appears on your credit report. The highest balance for 3 months or for a year, even though it was paid off, could very well also appear on your credit report.

You did establish your credit worthiness with your credit card.

Credit card companies might not like it that you pay the bill in full every month, but faithful payments is exactly what mortgage companies look for
=======================================================
Technically you are correct but I think Johnmoni is equating this more to a Charge Card account like AMEX.
Walt

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Author: GregFisher Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 47030 of 308226
Subject: Re: Consumer Credit Counseling Service Date: 10/18/2000 12:01 PM
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Technically you are correct but I think Johnmoni is equating this more to a Charge Card account like AMEX.
Walt


American Express reports to credit bureaus, too.

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