Question #1: There was an article distributed by the Associated Press recently that stated that consumers that retailers are now beginning to utilize a "debit" scoring system that will help them decide on the spot whether they'll accept your personal check or debit card. Is this really possible?

Thankfully, no. It's amazing the type of negative reaction an article like that can create. What is happening, and rightfully so, is the development of a "debit" bureau...sort of like the credit bureau, but to try to make it understandable to everyone, this new national "debit" bureau only reports what amounts to negative information. If you have a pattern of writing hot checks or writing checks on closed accounts, then your name will end up in this new "bureau." It already exists to a degree on a local/regional basis, but now the big national banks are banding together, and rightfully so, to try to trim some of their $15 billion a year in losses (which are growing at the rate of 12-14% a year). If you're being a good boy or girl and keeping your checkbook balanced (or at least not writing hot checks) you've got nothing to worry about. They're not accessing your personal credit information.

Question #2: I get credit card offers all the time in the mail...doesn't that mean I have great credit?

Question #3: There are three credit bureaus? Why do I have to worry about getting all three reports?

Because we live in a truly border-less business climate in America today. You might apply for a home loan from a mortgage company that uses Bureau A, your insurance company might pull a copy of your credit report from Bureau B, and that new job you hope to get? Your new potential employer may very well get a copy of your report from Bureau C. Cover your bases...get copies of your credit reports from ALL THREE credit reporting bureaus. And if you're married, get your spouse's reports from all three, too.

Question #4: What a minute! You say that my insurance company and employer can obtain a copy of my credit bureau reports? What for? What business is it of theirs?

Personal credit information has become an increasingly important part of the underwriting process for insurance companies over the last 20 years. Right or wrong, insurance companies have found the potential for fraudulent claims rises with the existence of a bad credit history. There have even been cases of insurance companies refusing to write policies for consumers with torn up credit...whether it's home owners, renter's, auto or even life insurance. And if you do have a bad credit report and they agree to cover you, bet on paying a higher premium. That's why it is absolutely critical that consumers get copies of their credit reports at least once a year, to make sure the information being reported is accurate. By the way...millions of Americans get what I call "computer bullets in the back" every single day because of incorrect or erroneous information being reported on their credit reports.

Question #5: And did you also say that my employer--or a potential employer--can obtain a copy of my credit report? Why? What business is it of theirs?

Yes, employers have been obtaining credit reports for their pre-employment screening processes for years. But now thanks to some recent changes in the laws concerning credit information (Fair Credit Reporting Act), anyone wanting to pull a credit report, from insurers to employers and anyone else in between, must get the consumer's written authorization first. And by the way, if you're turned down for a job because of negative credit information, that employer must notify you in writing--just like you applied for credit--that you were declined employment due to negative credit information. Under federal law, consumers are given a copy of the credit report used in the decision for free upon written request.

Question #6: What sort of letter do I write to the credit bureau to get a copy of my credit report, and what's their address?

A sample letter is on the next page of this special report (as well as posted on my website); all of the addresses are also listed for your convenience.

Question #7: What do I do about information on my credit report left over from my ex-spouse? How long can that stay on my report, or should it even be on my report?

Lots of variables with that question. If you've got debt that was incurred jointly during your marriage and the debt is still in force (i.e. a home mortgage, a car loan, credit cards) then that account can be reported on your credit report as long as the account is open and carrying a balance. That's why I always tell consumers the minute you're heading towards a divorce, turn off the credit cards and freeze the balances...and make the payoff of those accounts a part of any divorce settlement. Don't make the mistake of splitting up the debts and expecting the other spouse to follow through and pay off all of the accounts...because they won't. They'll flake. Something will come up, it always does. And when it blows up and you're still "on the line" it doesn't matter. Because you're the one that's damaged by the negative information. For potentially years to come.

Question #8: So how long can negative information be reported on my credit report?

If you handle your affairs poorly, a long time. Negative information can be reported for 7 years from the date of last activity. Date of last activity is defined as date of last charge or date of last payment. So if you don't pay on an account for 3 or 4 years, and then all of sudden begin paying on it, you're creating a 10-11 year nightmare. Unfortunately, there's a disincentive in the system for doing the right thing.

Question #9: What about bankruptcies? How long can they be reported?

A bankruptcy can be reported for 10 years from date of discharge. But the rules of the credit game are really changing, and a bankruptcy doesn't have the same negative stigma attached to it as it did once upon a time. I'm seeing countless examples of consumers re-entering the credit system within 2-3 years after their bankruptcies. It's a combination of factors at work: First off, the consumer doesn't have any more debts, do they? And secondly, the credit grantors across the country are lowering their underwriting criteria and opening up the marketplace to more people that may have filed for bankruptcy. After all, with 1.3 million consumer bankruptcies last year alone, lenders would run out of people to lend money to if they didn't "lower the bar."

Question #10: What about Consumer Credit Counseling Service? How do they show up on a credit report, and what do you think of their services?

While they tout themselves as a "non-profit", the folks over at CCCS are no angels. They're debt collectors, paid a "voluntary" 10-15% commission of everything they collect. So it's important for consumers to remember that before they spill their guts about their financial situation to a CCCS counselor; they're agents for the other side. Don't forget it. And for the first part of your questions, a notation that you're in credit counseling on your credit report is interpreted as a major negative by almost all lenders. It's about as bad as a bankruptcy.

Question #11: What information do you have about identity theft?  This is a major problem and I want to learn more and [hopefully] avoid the brain-damage.

Good for you...I hope you can dodge this bullet.  I've gotta whole section devoted to this topic, so knock yourself out.