Credit Repair: This One's For Jamie

For more than seven years my sister-in-law, Jamie, has been upset about something one of her former roommates did to her when she was in college. Now that Jamie has moved to south Georgia she might say what her roommate did "sticks in her craw." The situation involves a telephone bill, a roommate and a hoodlum. Sounds a lot like a board game or a clue on Jeopardy, but it's not.

What happened to Jamie is so common that it may have happened to you when you were a wide-eyed, wet-behind-the-ears freshman away from home for the first time. Not that Jamie really fit into that category at the time, but I don't want to be overly critical of how long it took her to catch on. Just kidding.

They Started Out As Friends
From what Jamie has told me, she and a number of her friends decided to move into an apartment together. As is often the case, each of the friends had a separate utility put in her name. One got the electric bill, one the water and Jamie got the telephone bill. The friends were to split the electric, water and telephone (cost of standard service) and each friend was to pay for her own long distance telephone calls. So far, so good.

It seems the roomies rocked along quite comfortably for awhile splitting the bills, hanging out and enjoying each other's company. Then one day things started to change. One of her roommates had started dating a hoodlum. After the hoodlum was thrown in jail (as is often the case with hoodlums) he began making collect telephone calls from prison. Each time her friend accepted a collect call from prison the call would show up on the telephone bill in Jamie's name as "Collect Call: Sing-Sing Prison." Jamie didn't like the idea that her name was now attached to a building repository for the underbelly of society. But that is not what has upset Jamie lo these many years.

They Stiffed Her
At some point in the relationship, the roomies decided that all good things must come to an end. The three packed up their boxes, loaded up their cars and parted ways. The problem arose when it came time to get payment from the newly separated friends. When the final telephone bill arrived the collect call portion from Sing Sing Prison was outrageous.

Jamie contacted her former roommate about paying the bill. Payment never came. She again contacted her roommate. Still no payment. Again she contacted her roommate. Well, you can see where this is going. It wouldn't be much of a story if the roommate ended up paying the bill now would it. Jamie was stuck with the bill which, I am told, has never been repaid by the roommate.

Now A Word Of Advice
To those students who are getting ready to move into an apartment with roommates for the first time consider this:

(1) If the utility bill is put in your name you are responsible for it. The utility company does not care that two of your roommates stiffed you on the bill. When it comes time to issue a negative credit report or sue, you are the one who will suffer; not your roommates. Try to have the bill put in all of the roommates' names.

(2) Before parting ways with your roommates, call and have any utilities in your name shut off. You do not want to be responsible for bills from people who moved in after you left.

(3) Get a payoff from all of the companies that have bills in your name (i.e. utility, telephone, Blockbuster, etc.) before you move out. Make sure your roommates pony up their portion before you part ways.

(4) Check out my post on repairing your credit for more information on fixing your credit.

Identity Theft: Pardon Me Maam, But You Don't Look Like A Roger

Several years ago I worked with an attorney who had received a notice that her credit card limit had been exceeded and that she needed to pay more than $500 to bring the card under the limit. She was shocked. She never carried a balance on any of her credit cards and paid all of her bills promptly. I told her to check her purse to see if the card was missing. As it turned out, not only was her card missing but also her driver's license, debit card and other valuable information and documents. She was, at that time, in the process of learning what it is like to have her identity stolen.

The weeks following her discovery brought more distressing news. The thief who had stolen her information had obtained other credit cards using her name and social security number and had changed her bank account PIN. The thief had taken a substantial amount of money out of her bank account causing her to bounce checks and other financial hardships. She discovered that the process of straightening out identity theft is not an easy one and can take literally years to fix. I have even heard some people say you can never fully recover from this type of theft.

The good news (to the extent there was any good news) is that the thief was caught almost six months after the theft at a Wal-Mart located in southeast Georgia. The thief was trying to use her debit card to access her bank account. Given the hardship created by the process of regaining her identity this was only minor consolation.

Prevent Identity Theft
For some tips on preventing identity theft refer to the following website: Federal Trade CommissionThe website offers practical ideas for protect yourself from the situation faced by my attorney friend. Here is a related article dealing with identity theft.

What Is Credit Card Fraud
Identity theft and credit card fraud seem to go hand in hand these days. It is often easier for a thief to obtain personal information and use it to apply for credit cards than to steal cash or checks out of a persons wallet or purse. More lucrative too. Here is a brief explanation of credit card fraud:
1) when someone fraudulently obtains, takes, signs, uses, sells, buys, or forges someone else's credit card information;
2) when someone uses a credit card with the knowledge that it is revoked or expired or that the account lacks enough money to pay for the items charged. This type of fraud is committed by the person who actually owns the card; or
3) when someone sells goods or services to someone else with knowledge that the credit card being used was illegally obtained or is being used without authorization.

My friend was certainly a victim of credit card fraud. But she would be the first to tell you that reversing some credit card charges was only a minor inconvenience compared to the process of having to restore her identity.

Watch Out For Some Credit Repair Companies

At least once a day I hear or read a television, radio, newspaper or internet ad claiming “Credit problems? No problem!” or “Let us erase your bad credit — 100% guaranteed.” The ads promise to help consumers with poor credit histories clean up their credit reports so the consumer can get loans, mortgages, insurance, etc. Never mentioned in the ads are the thousands of dollars often charged for such services. While many of the credit repair companies can in fact lower your monthly payments and negotiate down a debt, avoid the following at all costs:

CREDIT REPAIR COMPANIES TO AVOID
1) companies that want you to pay for credit repair services before they provide any services. The Federal Credit Repair Organizations Act prohibits credit repair companies from requiring you to pay until they have completed the services they have promised;
2) companies that do not tell you your legal rights and what you can do for yourself for free;
3) companies that recommend that you not contact a credit reporting company directly;
4) companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
5) companies that advise you to dispute all information in your credit report or take any action that seems illegal. If you follow illegal advice and commit fraud, you may be subject to prosecution.

DISPUTING A DEBT
The law allows you to dispute an inaccurate credit report free of charge. The "big three" nationwide credit reporting services are "Equifax," "TransUnion," and "Experian." Once any of these agencies receive a consumer dispute they are required to take the disputed debt off of the report until an investigation is conducted. A common tactic used by illegitimate credit repair companies is to dispute every negative mark on a credit report, show the consumer a clean credit report (clean because the reporting agency is conducting an investigation), collect the fee from the consumer for the temporarily "cleaned up" report and disappear once the fee is collected.

On the other hand, credit repair companies can be helpful in negotiating lower monthly payments and lump sum settlement agreements with creditors. Many companies have long established relationships with creditors and payment reduction agreements creditors are comfortable with signing.

One last thing, you can order a free annual credit report at annualcreditreport.com, or call 1-877-322-8228.