Credit and Debit Card Ratings

One-third of Americans in Debt and Facing Collection

Have a few blemishes on your credit report? You’re not alone. According to a new study from the Urban Institute, over one-third of Americans had debt in collections in 2013. The debts averaged $5,178 and include debt like medical bills, credit card balances, student loans, parking tickets and utility bills.

In a very real sense, the phenomenon is making the US a debtor nation. People all over the country have debt in collections. However, some areas have higher concentrations of debt than others. Nevada residents have the highest rate of debt in collections, with 47% of residents with delinquent debt and an averaged owed of $7,198. Eleven of the twelve states where 40% of more of the residents have debt are in the South.

Once a debt goes into collections, it can remain on a person’s credit report for up to seven years. And, even after a debt in collections is paid off, it can still reduce a credit score for a period of time. These delinquent debts can have a serious effect on people’s credit, job prospects and more.

People with low credit scores are often considered bad candidates for certain jobs. Bad credit can keep you, for instance, from getting a security clearance, which is necessary for certain companies that work with the federal government. Not only can delinquent debts keep someone from qualifying for a mortgage; they can cause apartment rental applications to be turned down, as well. When you have bad credit, you can pay more for everything from insurance to renting a car. The reduced opportunities and higher costs can keep people from the financial stability that would, in the future, reduce their chances of winding up in debt.

Dealing with Debt Collectors

Calls from debt collectors can be embarrassing and intimidating. But, as a consumer, you have rights and protections. If you are contacted by a debt collector:

• Always ask for communication about the debt in writing. This gives you time to research the debt and verify whether it is valid.

• Check your credit report. If you have been reported for debts that you do not owe, you can have those records removed so they do not affect your credit score.

• Know that you can negotiate debt payments. In some cases, debt collectors will be willing to accept a lower amount if you can pay off the debt all at once. You can also ask for payments.

• Do not hesitate to report debt collectors who harass you. Actions that legally qualify as harassment include calling outside of approved hours, calling you at work after you have asked them to stop and seeking unjustified amounts. Both your state’s Attorney General’s office and the FTC can help.

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  • One-third of Americans in Debt and Facing Collection

    One-third of Americans in Debt and Facing Collection

    Have a few blemishes on your credit report? You’re not alone. According to a new study from the Urban Institute, over one-third of Americans had debt in collections in 2013. The debts averaged $5,178 and include debt like medical bills, credit card balances, student loans, parking tickets and utility bills.

    In a very real sense, the phenomenon is making the US a debtor nation. People all over the country have debt in collections. However, some areas have higher concentrations of debt than others. Nevada residents have the highest rate of debt in collections, with 47% of residents with delinquent debt and an averaged owed of $7,198. Eleven of the twelve states where 40% of more of the residents have debt are in the South.

    Once a debt goes into collections, it can remain on a person’s credit report for up to seven years. And, even after a debt in collections is paid off, it can still reduce a credit score for a period of time. These delinquent debts can have a serious effect on people’s credit, job prospects and more.

    People with low credit scores are often considered bad candidates for certain jobs. Bad credit can keep you, for instance, from getting a security clearance, which is necessary for certain companies that work with the federal government. Not only can delinquent debts keep someone from qualifying for a mortgage; they can cause apartment rental applications to be turned down, as well. When you have bad credit, you can pay more for everything from insurance to renting a car. The reduced opportunities and higher costs can keep people from the financial stability that would, in the future, reduce their chances of winding up in debt.

    Dealing with Debt Collectors

    Calls from debt collectors can be embarrassing and intimidating. But, as a consumer, you have rights and protections. If you are contacted by a debt collector:

    • Always ask for communication about the debt in writing. This gives you time to research the debt and verify whether it is valid.

    • Check your credit report. If you have been reported for debts that you do not owe, you can have those records removed so they do not affect your credit score.

    • Know that you can negotiate debt payments. In some cases, debt collectors will be willing to accept a lower amount if you can pay off the debt all at once. You can also ask for payments.

    • Do not hesitate to report debt collectors who harass you. Actions that legally qualify as harassment include calling outside of approved hours, calling you at work after you have asked them to stop and seeking unjustified amounts. Both your state’s Attorney General’s office and the FTC can help.

  • CFPB To Police Prepaid Debit Cards

    CFPB To Police Prepaid Debit Cards

    In yet another sign of the mainstreaming of prepaid debit cards, the Consumer Financial Protection Bureau (CFPB) announced this week that it would begin accepting complaints from Americans encountering problems with these increasingly popular financial products. Although the market for prepaid debit cards has been steadily expanding and attracting big name financial players like American Express, consumer advocates have expressed concern about a lack of regulatory oversight.

    The CFPB is in the midst of developing proposed regulations targeted at prepaid debit cards, which should be released in the coming months. In the meantime, the CFPB, the federal government’s consumer watchdog for all manner of financial matters, is urging Americans who have run into problems with prepaid cards to get in touch. “By accepting consumer complaints about prepaid products and certain other services we will be giving people a greater voice in these markets and a place to turn to when they encounter problems,” says CFPB director, Richard Cordray.

    In its statement announcing the move, the CFPB outlined the specific issues consumers should alert it to, including:

    • Trouble managing, opening or closing an account
    • Incorrect or unexpected fees
    • Overdraft issues
    • Frauds, scams or unauthorized transactions
    • Advertising, disclosures and marketing practices
    • Adding money and savings and rewards features

    The CFPB already accepts consumer complaints about a wide range of financial products, including credit cards, mortgages, consumer loans and bank accounts. The CFPB complaint process works like this: After receiving a complaint, the CFPB expects companies to respond within 15 days and outline the steps they plan to take to address the problem. The CFPB also expects some sort of resolution to all complaints within 60 days. Consumers who do submit a complaint receive a tracking number and can follow the process on the CFPB website.

    Complaints about prepaid cards can be submitted through the CFPB website. In the same announcement about accepting prepaid debit card complaints, the CFPB also said that it would begin to address problems with debt settlement and credit repair companies as well as pawn and title loans suppliers.

Credit and Debit Card Ratings