You definitely cannot judge a book by its cover. On the cover, it looks like the recession is over and everything is growing again. After all, economic growth for the second quarter was reported this morning at 3.5%. The best quarter in over a year.

You just have to love government accounting. It is a joke that the stock market can look at these numbers and take them for face value. Economic growth is made up of all types of components. One of those is auto sales. Because of Cash for Clunkers (a one time stimulus effect), auto sales rose an unprecedented amount. Check out the chart here!

According to www.clusterstock.com, vehicle sales were up an unprecedented 157%. That added 1.66% to the 3.5% number. We are seeing the one time after effect of the stimulus money. Unfortunately, we are not seeing the after effect of jobs as a result of the irresponsible spending by the government. Wait until next quarters number when you don’t have Cash for Clunkers. It not only will probably not add anything, it will probably subtract from growth.

I was actually impressed that President Obama didn’t take a victory lap. He was realistic in pointing out that people are still unemployed and hurting financially. That is actual reality. What President Obama failed to mention is that all of our money that they are spending isn’t doing much to fix the problem long-term.

Incidentally, Edmonds.com came out with some interesting numbers regarding the Cash for Clunkers program. They reported that Cash for Clunkers might have cost taxpayers $24,000 per vehicle sold.

The White House fought back “alleging that Edmunds was calculating mystery auto sales on Mars and missing real show-room deals.” Well the White House is one group of people that should understand mystery numbers from Mars. They do “space” accounting every time the Government reports economic data.

Tags: Bob Brooks, cash for clunkers, economic growth, Government, President Obama, recession, stimulus

I am getting a lot of e-mails concerning frustration over credit card companies and their fees. As I wrote last week, credit card companies are starting to charge annual fees to their cardholders. Bank of America announced that they would start charging an annual fee to a “small percentage” of their account holders ranging anywhere from $29 to $99 a year. It appears to me that the new trend will be the addition of or the increasing of annual fees for all credit card companies. Why not? If you are Bank of America and have 80 million cardholders, this is a money making opportunity. For most cardholders, there is no option but to pay the fee.

What about those of you that aren’t carrying a balance? Do you close down the card? Many listeners want to take that route. For one, they don’t want to pay the fee. There is also a feeling of getting back at the card company by not being a customer anymore. If you are wanting to close a credit card because of the addition or increasing of a fee, I would think twice for the following reasons.

1) By closing your card, you could adversely affect your credit score. I certainly wouldn’t close down a high credit limit card.
2) We live in a finance based society that looks at your credit score (right or wrong) as the ultimate grade of your financial responsibility. It is always going to be important to keep your credit score as high as possible. Potential employers look at credit scores as well as insurance companies use it to determine your insurance rates. A good score is important.
3) It is the new cost of credit and one we are going to have to deal it with because of my first two points.

If you are wanting to close down those accounts, think twice. If you weren’t carrying a balance, the credit card company will be happy to see you go. You will end up more than likely hurting yourself.

Tags: Bank of America, Bob Brooks, Cardholders, Credit Card Companies, credit card fees, Credit Score

I came across an article that told a pretty outrageous story about a guy who received his new credit card in the mail. It was for a First Premiere MasterCard. He looked at his new terms and conditions and it had an interest rate of 79% and no, that is not a misprint. I decided that I would go online and check out this card. I didn’t find a 79% interest rate. I doubt that they advertize that one. However, I found something much worse.

Now keep in mind that an interest rate represents the cost of holding debt. If you add in fees and the interest rate, you would get the total cost of holding the card. That would be the ultimate interest rate.

If you take out this card, you get charged these fees and interest rates:

9% interest rate
$29 one time account set up fee
$99 one time program fee
$48 annual fee
$7 monthly service fee
$25 if they decide to raise your credit limit

Your initial credit limit is $250. When you receive your first bill, you would have a balance of $185. If you kept the card for the full year, you would have paid $268 in fees plus interest of 9.9%. If you say yes on the phone to the card, you are automatically on the hook for $185. If you don’t pay it, you are eventually going to default and go into debt collections. As long as you keep the card open because you might not be able to pay the $185, you will be charged $7 a month.

Unfortunately, these cards are typically what people with low credit scores have to resort to in order to establish credit. If you really figured out the total interest, it would easily surpass well over 100%. That would be if there were any credit limit left over after the fees. Do you think that we need some reform? The politicians allow this type of thing to happen.

Tags: Bob Brooks, credit card, credit limit, credit scores, Debt, debt collections, interest rates, MasterCard

For a man who is up for re-election, he sure is playing a dangerous card. In fact, our Governor is looking more and more like a Washington politician. Raising taxes on the citizens of Texas might find Governor Perry without a job. Unfortunately, he is trying to slide it in under the radar.

On November 3rd, there will be Propositions 1, 2, and 3 allowing the State of Texas to start taxing Residential Homeowners. So if you own a home, and these laws are passed, you will be taxed by the State.

PLEASE VOTE “NO” to Prop. 2 and 3 (HJR 36) unless you want to pay taxes to the State also for owning a home.

Proposition 2: The proposed amendment would appear on the ballot as follows: “The constitutional amendment authorizing the legislature to provide for the ad valor em taxation of a residence homestead solely on the basis of the property’s value as a residence homestead”.

Proposition 3: The proposed amendment would appear on the ballot as follows: The constitutional amendment providing the uniform standards and procedures for the appraisal of property for ad valor em tax purposes”. Check this out below:

http://www.sos.state.tx.us/elections/voter/2009novballotexp.shtml

I wasn’t a big Kay Bailey Hutchison fan until now.

Tags: Bob Brooks, Governor Rick Perry, Homeowners, Kay Bailey Hutchison, politicians, taxes, Washington

If you are a bad credit risk, then FICO will lower your credit rating by giving you a low credit score. Well Moody’s Investor Service is the FICO for countries. They place the credit rating on a country’s debt. The best credit rating that a country can have is Aaa. Can you believe that the United States has an Aaa rating on its debt?

We are the most irresponsible country in the free world when it comes to debt and we have an excellent record. However, Moody’s issued a “stern” warning today.

“The Aaa rating of the U.S. is not guaranteed,” Steven Hess, Moody’s lead analyst for the United States said in an interview with Reuters Television. “So if they don’t get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy.”

Who are we kidding? Do you really think that our debt situation in this country is going to get better over the next 3 to 4 years? Why give someone as irresponsible as the politicians in Washington 3 to 4 years?

The rating is really not about the Great USA but more about the job the politicians are doing with fiscal responsibility. Moody’s needs to do their job and send a message to Washington and get their attention. These ratings services continue to fail to do their job. They were asleep at the wheel while they gave great credit ratings to all of those sub-prime mortgage backed bonds that created billions upon billions of dollars of loss. I often wonder if there is anyone really doing their job.

Let’s see…the SEC turned and looked the other way and allowed Bernie Madoff to create the biggest ponzi scheme in history, causing a ripple effect of tremendous financial pain for tens of thousands. The ratings agency put their seal of approval on essentially worthless bonds which helped cause the financial crisis that we will deal with for years to come. Politicians have turned their back on everything from Wall Street to the credit card companies as long as someone is paying for their re-election. We have Moody’s turning their back as our politicians continue to play irresponsible politics with our kids’ futures.

It is really sad that we don’t have real leaders in this country that put responsibility over agenda.

Tags: Bernie Madoff, Bob Brooks, credis, Debt, FICO, Moody's

Credit card companies are aggressively closing credit card accounts and/or reducing credit limits. In theory, this can decrease your credit score. Part of your credit score comes from a formula called the credit utilization ratio. Simply put, this is a look at how much total credit limits you have available to you versus how much of that credit limit you are using. For example, if you have $20,000 in credit limits and you are using $10,000 of that $20,000 in credit limits, you are utilizing 50%. Ideally you want that ratio lower than 30%. As that ratio goes up, your credit score goes down.

So it stands to reason that if an account is closed or a credit limit is decreased, your utilization ratio could increase. Let’s go back to the previous example. At this point you are using $10,000 of the $20,000 credit limit that has been given to you which makes your utilization ratio 50%. Let’s say that the credit card company decreases your credit limits by $5,000. Now you have $10,000 worth of debt and in total $15,000 of credit limit. Now your credit utilization ratio is 66%! OUCH!!

Of course, credit scoring is formula based and depending on what is on your credit report determines the positive or negative impact on your credit score. FICO just did a study to determine how the credit scores of consumers are affected when credit limits are reduced and accounts are closed. The results were a little surprising. They basically took consumer credit reports and ran hypothetical scenarios. The moderate scenario decreased credit lines up to 10%. The medium scenario decreased lines up to 25%. The severe scenario decreased credit limits up to 50%. Here were the results:

Moderate Scenario – 84% of those tested had no change in their credit score
Medium Scenario – 68% of those tested had no change in their credit score
Severe Scenario – 56% of those tested had no change in their credit score

Of course everyone’s credit report is unique. The effect of a closed account or a decrease in credit limits could or could not negatively effect your credit score based on the overall credit profile, the % reduction, and/or whether the reduction or closure causes the consumer to miss payments or take other actions.

Here is the bottom line of when you should and should not close an account. Obviously, a credit limit decrease is out of your control.

RULE OF THUMB

Only close a credit card account in the event that it allows you to keep a favorable interest rate. If by keeping it open your interest rate goes to 30%, then let them close it. Otherwise there is not any significant downside to keeping your credit card account open.

Tags: Bob Brooks, Credit Card Companies, credit limits, Credit Score, credit utilization ratio, FICO, interest rates

I am always skeptical when a company takes a “survey” whose end result supports their business agenda. Vanguard just published a survey, co-authored by the head of Vanguard Investment Counseling and Research, which states “investors continue to believe equities (stocks) are an important part of their portfolios despite the worst financial crisis in several generations.”

For the mutual fund industry, the crowd effect is extremely important. For years the mutual fund industry has relied on the crowd (investors) thinking a certain way about investing. After all, investor’s attitudes can mean big profits for the mutual fund industry. For instance, the last thing that the industry wants any investor to do is sell their investments. That would not be profitable for the industry. This is why they beat into your head that you are a long-term investor and that the market always goes up over the long-term. The mutual fund industry will come out with these studies and surveys that derive broad based conclusions and use them in support of what they want you to believe. These surveys can help an investor formulate an opinion on investing based on the fact that everyone else feels the same way. It is investing with the crowds. Affect the psychology of the crowd and influence the actions of the individual investor.

One of my favorite parts of the survey stated that “the market chaos has made investors adjust their expectations. Investors anticipate a medium return of 7.5% now, down from the 10% to 12% long-term average. Well they might want to dial down those expectations a little more. One of the greatest myths the mutual fund and financial advisor industry has led investors to believe is that they will average 10% a year in the stock market. The history of the Dow Jones tells a little different story.

From 10/31/1928 until 09/30/2009 – The average annual return was 4.62%
From 09/30/1989 until 09/30/2009 – The average annual return was 6.62%
From 09/30/1999 until 09/30/2009 – The average annual return was -.062%

Tags: Bob Brooks, crowd effect, financial crisis, Investing, Stock Market, Vanguard

From the Huffington Post:

“There is a phenomenon happening in the United States of America,” said Orman. “It’s where people are getting seriously angry, so angry at their banks, their credit card companies. They feel like they are not being treated fairly when it comes to the interest rates they are paying. Guess what they’re doing: They are staging a debtors’ revolt. Oh yes, a debtors’ revolt.”

The debtors’ revolt started with Ann Minch, a 46-year-old woman in Red Bluff, Calif., who declared via YouTube that she would not pay off her credit card debt after Bank of America hiked her interest rate.

When you are on the radio or especially on TV, you have a certain amount of responsibility to monitor what you say. Suze Orman is getting on the same side of the table with the lady who is walking away from her debt because she is “revolting.”

So, let me get this straight. She is giving PR to a lady who is not paying her debt because that mean old credit card company raised her rates. Well, Ms. Minch, life just isn’t fair now is it? I am wondering if Ms. Minch read the Bank of America agreement prior to signing on the dotted line giving the credit card company the right to do whatever she wants to do?

Suze Orman is condoning this lady’s behavior of walking away from the debt as well as justifying it. Now to be fair, I am basing this on a 3:34 minute clip that I saw. I am hopeful that she was responsible enough to tell her viewers at some point that walking away from your debt is truly a bad idea at best. If she is going to run that segment, she should be saying it every 3 to 4 minutes. At any rate, I think that it is highly irresponsible to give PR to such an idea when she could be encouraging many people to walk away from their debt.

So, Suze what are you going to advise your followers when the consequences set in after they walk away from their debt? What are you going to tell them to do when they are dealing with debt collectors, possible law suits, and trashed credit scores?

This is the problem with this country. No one wants to take responsibility. Like it or not, you signed the bottom line on that credit card account. You bought the big screen television. Oh and…life isn’t always fair. However, you have to live up to your responsibilities and obligations. We all know the credit card industry is crooked. However, getting mad at them will do you no good. You granted them all of the power when you signed the bottom line which said in fine print that they could do these things to you.

If you want to get mad, revolt at the politicians. They are the ones truly responsible for this mess today.

Tags: Ann Minch, Bob Brooks, credit card, Debt, politicians, Suze Orman

Being in the business of money management, you are almost held hostage to financial television. You have to watch a certain amount of it to catch breaking news. Besides the CNBC cheerleaders celebrating Dow 10,000, that level is nothing more than a round number with 4 zeros. Sorry, President Obama, it is neither a milestone nor evidence that your economic stimulus package is working. However, that was a nice sound bite this past week.

So the question arises why can’t I just acknowledge the bullish case and join in with the madness of the crowds? Well, it comes down to those pesky fundamentals. They represent reality and not the fantasy world where the politicians reside and everyone else that has skin in the game live. The reality is that the economic backdrop does not support what is occurring in the stock market. As I have written before, it is going to be quite the rude awakening when those lights come back on and the clean-up of the after party begins.

Every week we get more reality. Soon enough it is going to be tough for this market to block it out. Last week we received the latest on the foreclosure crisis. During the last 3 months, 937,840 people received a foreclosure letter. That means 1 in 136 homes were in foreclosure. That is also the worst 3 months on record. All of this is going on at the same time that the government has rolled out all types of programs to prevent this from happening. This of course is just one example of reality. The real estate markets cannot even begin to bottom and recover while this is occurring.

Potentially further the problem is the fact that we are starting the second wave of adjustable rate mortgage adjustments. The re-setting of adjustable rate mortgages are a main contributor to the foreclosure crisis. You can read about it here.

There is some good news. Yes, I did utter the words “good news”. Businesses are figuring out how to work in the new normal. Beyond some improvement in the economic numbers the only thing that has been positive has been the stock market. Banks are still not lending and consumers are still in lock down mode and unemployment is still at dangerous levels.

Even within that backdrop, businesses are figuring out how to start getting deals done and activity is picking up. So, I don’t think that we are going to find ourselves again in the economic meltdown where everything comes to a grinding halt. Businesses are figuring out how to navigate in our new normal. The strong businesses will become stronger. The bad business models will go away. Well, the ones that are not on government life support.

So, how do you handle this environment? It is standing advice. You watch the amount of risk that you are taking with your investments. Know the risk, be comfortable with the risk, and have a plan B in the event that we run into trouble again.

As for this week, watch corporate profits. Minus the earnings report for Alcoa, the market didn’t particularly care for many of these reports. The Dow should be heavily impacted (one way or another) as many of the Dow components report this week.

Tags: adjustable rate mortgages, Bob Brooks, Dow Jones, Foreclosure Crisis, investments, money management, politicians, Stock Market

The Bernie Madoff scheme was the largest Ponzi fraud in the history of the markets. Currently, he is serving life in prison for ruining the lives of hundreds of people and affecting the lives of thousands more in a ripple effect. So, how did that happen? Isn’t someone responsible? We are about to get that answer in real time. A lawsuit was filed on behalf of some of those swindled against the SEC. Now you would think that the SEC could not be sued because they are part of the Government. It just so happens that they can be sued and it is about to get ugly.

I have argued that the SEC is completely responsible for allowing this to happen. The whole Bernie Madoff scandal could have been avoided. A document completely exposing the Bernie Madoff ponzi scheme was sent to the SEC.

The 19 page document entitled, The World’s Largest Hedge Fund is a Fraud, outlined 29 red flags and reasons why the writer felt that the hedge fund was a ponzi scheme. The case was outlined in such a detailed fashion that the SEC didn’t really even need to do a detailed investigation to see the fraud. You can see the report by clicking here.

The letter was sent to the SEC on November 7, 2005 and the SEC did nothing about it.

The letter outlined that if this was allowed to go on, the losses could be as large as 50 billion dollars. Well, guess what, he was correct.

It is unbelievable to me that the SEC, who is the chief regulator of the investment business, could be this neglectful. Yes, these are the people that are supposed to protect you and I from the bad guys. So who is really responsible for the $50 billion or so in losses – Bernie Madoff or Bernie Madoff and the SEC?

Now, the SEC will have their day in court. What do you say to so much gross negligence?

Tags: Bernie Madoff, Bob Brooks, lawsuit, ponzi scheme, SEC

That sneaky Bank of America had me believing that they were actually being good guys by stating that they would not be raising interest rates anymore due to the new credit card legislation. As I wrote in my piece a few days ago, one of the reasons that they can afford to make this great PR move is because they probably have already raised all of the interest rates.

Well, it was announced today that they were going to start charging annual credit card fees ranging anywhere from $29 to $99 a card. According to BofA spokesperson Betty Reiss, it would initially affect about 1% of the bank’s credit card customers. “We’re testing this to see what the feedback is. In terms of any plans going forward, we haven’t made any decisions yet,” said Reiss.

Ms. Reiss, what do you think you are going to hear? “Oh thank you Bank of America for charging me fees. Please charge me the highest fee.” Some of the things that come from the communications department of Bank of America simply amaze me. Here is some feedback Ms. Reiss – I think that it stinks you are sticking it to your customers with fees as high as $99 a year.

This gets even better. Who do you think is going to get charged the higher fees? According to the bank it is based on “risk and profitability.” Does that sound familiar? They are going to slap the higher fees on those that pay on time and don’t accrue any interest or those who are late every once in a while. It is the same old abusive credit card practices disguised in another way.

So let’s do the math on this one. They have approximately 80 million credit cards in circulation. Let’s say the fees average $50 per person. That is an extra $4 billion dollars a year in cash once they get through charging fees to everyone. You can’t convince me that BofA will just charge a portion of their customers. Of course, that is just the introduction of that fee. The new consumer abuse in the world of credit cards will shift from raising rates to introducing new fees.

Now, let’s add in the fact that they have already raised the interest rates on their credit card holders and then changed them from fixed to variable. So, when interest rates go up (which is really the only place they have to go), Bank of America credit card holders will also experience a similar rise in their interest rates on their credit card debt. As a result, Bank of America ranks in even more in interest.

As I have said from day one, Congress did the credit card industry a favor with this credit card act. This is only going to be more profitable for these card companies.

Tags: abusive credit card practices, Bank of America, Bob Brooks, Congress, Credit CARD act, interest rates

I really cannot make this up. A client sent this to me yesterday.

“It’s said that greed pushes investors to buy stocks when they’re overpriced, while fear drives sales when stocks are at or near a bottom.

With that in mind, Philips Electronics has teamed up with a prominent Dutch bank to develop a system of warning home traders when they’re about to make a decision to buy or sell stocks while feeling overly emotional. It’s called “The Rationalizer,” and a test model is on display at an innovation summit in Brussels this week.

It consists of an “EmoBracelet” that looks like it might come out of a science fiction film, and a light-emitting “EmoBowl” that rests near a trader’s computer. The bracelet supposedly feels emotional states and sends radio signals to the bowl. As the user’s feelings intensify, the bowl glows yellow, orange and finally red.

The emotion-detecting technology is a “galvanic skin response sensor.”

He said the technique is surprisingly fast and accurate at detecting a person’s overall emotional levels, though it doesn’t distinguish between positive or negative feelings.

What is next? How about the magic stock picking 8 ball. Maybe I should invent the stock trader’s mood ring.

I had to read it several times to make sure it wasn’t a joke. I have a word for the wise. If you are day trading at home and you need an “EmoBracelet,” maybe you should think about doing something else. Trading is a stressful decision making process. There will always be a level of uncertainty and stress.

There is one good thing about the “EmoBracelet.” You are guaranteed never to lose money since you will never make a trade until you can manage to keep the EmoBowl at code yellow.

I assure you that I don’t need a bracelet to measure my stress level when I trade investments. I think my intelligence was just insulted.

Tags: Bob Brooks, day trader, Investing, Stock Market, stress, The Rationalizer

I have written many articles over the years about Bank of America and their questionable consumer practices. In all fairness, when America’s bank does something good, shouldn’t I be fair and post that as well?

With banks catching all of this “outrage” from the politicians about abusing consumers before the credit card act goes into effect in February, Bank of America announced that they would freeze all interest rate hikes on credit cards prior to the new act going into effect. Now, is Bank of America really doing something good for its customers? Well, it is a brilliant public relations move for Bank of America. However, my assumption is that BOA has already made all of the changes that they intended to make months ago. Thus, they had nothing to lose but go ahead and make the friendly gesture.

Then there is Wells Fargo. They just announced that they would stick it to their customers with rate hikes of 3%. This is one of the greatest opportunities afforded the credit card companies by our politicians (you know the ones who are “outraged?”). They are giving credit card companies the excuse to raise rates and then change the interest rates to variable rate cards. Now the interest rate can go up every time the benchmark increases. So they raise the base rate of the credit card and then allow it to go higher as the benchmark interest rate increase. Guess where interest rates are going? You guessed it! The higher probabilities are that interest rates are going up. As a result, credit card companies are going to make more money.

Don’t you just love it when the politicians step in and “reform” an industry? I still think that the credit card industry is going to get the better end of this deal. Of course, that works out pretty nicely for the politicians – more political contributions!!

Tags: anti-consumer practices, Bank of America, Bob Brooks, Credit CARD act, interest rates, politicians, Wells Fargo

A client of mine forwards me an e-mail from time to time that he receives from another financial advisor. These e-mails are typically very positive on the state of the market. I also find that they are filled with what I would refer to as market myths. I thought I would share some of these with you.

(1) Companies are showing strong profit reports – thus we are definitely in a strong recovery
Companies have slashed their expenses (and people) to the core. It doesn’t take much to report strong earnings when you drastically cut your expenses. Much of what is reported has nothing to do with actual profit growth and has more to do with the ability to cut expenses.

(2) Weekly jobless claims have been falling – that is a good sign
Every Thursday the government reports how many new people filed for unemployment benefits. Over the course of the last few months those weekly numbers have marginally improved. Does that mean that things are getting better in the job market? I don’t think that the weekly number means much of anything at this point. First, they should be decreasing just because companies have cut employment back just about as aggressively as they can afford to and still run a business. Second, I would argue that the unemployment claims numbers still running this high is a negative. As I pointed out, they should be on the decline. Recovery in the jobs market comes as soon as companies start aggressively hiring. This is something that we are not seeing.

(3) The Price of Gold is signaling that we are heading for inflation
This is not necessarily true when there is nothing there to produce inflation. Yes, we are printing money by the truckloads in this country. However, that money is not being used to boost consumer purchases or being put together as new consumer loans. All of that printed money is being used to absorb massive losses that would ordinarily not be there. Remember that gold is a psychologically driven investment. It does not have any value nor does it produce anything. It is not a currency. It goes up or down because people think that it should. There is nothing to back up the price of gold. The price of gold didn’t start going up until the dollar started having problems. Ultimately, the government will do whatever it has to do to shore up the dollar. However, longer-term, the dollar is in real trouble.
Economists declare that the recession is over – When the majority of economists thing one way, typically the minority is right. Economists as a collective body rarely make the right forecast.

This Week

It is all about earning, earnings, and more earnings. It is very hard to predict how the market will react to earnings reports. My guess is that companies will need flawless reports and near perfect outlooks for the near-term. Anything other than a show of strength might be tough for the market. The stock market has very large expectations right now. One thing for sure – this should make for an interesting week.

Tags: Bob Brooks, earnings reports, gold, inflation, myths, recession, Stock Market, unemployment reports

If you listen to credit repair commercials, you would think that they have this secret formula for “repairing” your credit scores. After all, some say they can remove every negative item up to even removing bankruptcies.

That is pretty impressive.

Well, just like everything in the debt solution business, it is an illusion. Here is the secret behind what they do for the hefty fee that is charged. The Fair Credit Act states that you can dispute any item on your credit repair that you deem to be incorrect and should not be on your credit report.

The questionable credit repair companies advise you to dispute everything on your credit report regardless of whether it is correct or not. In other words, if you have a bankruptcy on your credit report and know that it is legit, they advise you to basically lie to the credit reporting agencies and tell them that it should not be on your report. This is not against the law. However, it is highly unethical.

Why do they do this? Once the credit reporting agencies (TransUnion, Equifax, and Experian) receive the dispute, they then have 30 days to investigate the dispute. During the 30 days they contact the creditor and investigate. If the creditor doesn’t respond, then they have to remove the item.

Is it gone for good? Was the credit repair company successful? No, nothing unethical is that simple.

Eventually the creditor responds and the item goes back on the credit report. It was never permanently removed. It was only suppressed.

Now as far as the credit repair companies that are doing it right…you still don’t need them. Credit “improvement” and not repair (you credit score is not broken) is not rocket science. Unless you have extra money lying around to pay their fees and are completely uninterested in doing something that is easy, you can do it yourself for free.

In my book Deceptive Money, I take you on a step by step journey through the process. Anyone who has read the book agrees with my findings. This is something you can easily do for yourself effectively and ethically.

Tags: bankruptcy, Bob Brooks, credit repair, credit report, credit scores, debt solution business, Deceptive Money, Equifax, Experian, Fair Credit Act, transunion