Moans and loans that'll
scare the points off you
By John Latta • Bankrate.com

Still with us?

Well, we've saved the worst for last. If tales of mangled credit reports and the unholy offspring of bank mergers don't turn your heart to ice and your wallet to stone, you are probably ready for the neighborhood kids dressed as ghouls, goblins and bank loan officers on Halloween night.

Read on, if you dare.

Ah, the joy of taxes. One writer tells us she decided a few years ago to take advantage of a tax anticipation loan (a.k.a. rapid refund). No problem -- until a little later, when she and her husband decided to buy a home. That's when she found the loan was on her credit report as over 120 days past due. She wrote to the credit bureau pointing out that she had never received any money from the IRS, that the refund check had gone directly to the bank to cover the tax anticipation loan. The credit bureau took the loan off her report, but then put it back on when the bank told the bureau it was her loan. Collection agencies sent letters to her, but they never responded to her letters of explanation, she writes.

The couple decided to buy the house in the husband's name only to get around the problem, resulting in less of a house than they had wanted. Earlier this year our writer requested another copy of her credit report. There was that loan again, "Now showing as a charge-off account with a 1-99 date. Remember the original loan was made in 1994, so seven years would be 2001! Because I disputed it and they charged it off I now have to wait until 2006 for this to drop off my credit report."

We heard from a former student who started paying back his student loan to the We'll Teach You Company right after graduation. He had a coupon book for monthly payments of about $400. So far, so good.

Then one day our ex-student sees a deal he can't turn down, a new mattress with a 12-month, no-interest, no-payment plan. But the mattress store turned down his credit application. When he checked his credit report our e-mailer found 10 listings of negative items reported by his student loan server. Our graduate does recall one late payment, caused by his admitted failure to set up some automatic deductions on his new financial software.

But, he writes, his loan server "counted my five years of college and one loan each semester as 10 separate loan accounts. I was amazed by this because I was paying one coupon payment per month. If I was paying 10 separate coupon payments I would understand why 10 of them would be marked as 30 days late."

So far, the problem has led to a major hassle when he tried to buy a condo, a lower credit limit from his card company and a continuing battle with his student loan server even though he had dumped them for another company.

How about this problem from an irate e-mailer who had a charge-off blemish on his credit report for almost seven years -- in fact it was just six months from dropping off the report. "However, the account was purchased by a collection agency three years ago and the collection agency says they intend to keep it on my report for another four years! I explained to them that it was illegal for them to do that since it was a duplicate from the initial account holder. They said it was immoral of me not to have paid off the credit card account in the first place and that my morals haven't changed."

This e-mailer wrote for her credit report last year and, to her amazement, noticed a bankruptcy listed and tied to a car loan that she had records to prove was paid in full, and it "had been on there for FOUR years before I noticed it." She disputed the report and the record was put straight. Until April of this year, when the bankruptcy was put back on to her report. Still fighting with the first credit agency and her bank, our writer asked for a credit report from another agency, and it came complete with the bankruptcy record. "In the meantime, my home insurance was canceled (I had changed companies for better rate and had already paid my premium for the year) because this bankruptcy was listed on my credit report."

"How about being sent an unsolicited line for $20,000, writing a check for $15,000, then having it bounce! Of course, I had already written checks against it and they all bounced!"

So writes one bankrate correspondent who says this happened after she received a congratulatory letter and four checks from a major player in the credit industry, good old Bats In The Belfry Co. The e-mailer told us the offer claimed, "I can use these checks any way I see fit, but be sure to use them by the date stamped on them. I wrote the check within days of having received them, due to a natural disaster that occurred in my area. I placed the check in my business checking, the cost to me financially is over $40K, it ruined my perfect credit, my business credit, and they ignored my certified letter asking for them to remedy this. I can give no other details other than to say I had to litigate the matter."

When another e-mailer's bank was bought, she discovered some neat decision-making on the part of her new host, Putrid Pumpkin Bank. She got hit with a couple of $10 fees for dropping below the minimum balance (admittedly her own fault) but stormed down to the bank after what she considered an unfair $10 charge caused her to bounce a check.

Waiting in line, she had time to read her new bank's brochures. The bank offered a free checking account with no minimum balance and an interest checking account with a minimum balance requirement. So, she asked, how could she be charged minimum balance fees but not be earning interest? Ah, said the bank, her account had been "grandfathered" in from the old bank, so she had an account that could charge fees.

"So then I asked why I was charged a fee even though I had direct deposit. She said, 'We no longer give any benefit for direct deposit.' So I asked, 'The part where I am CHARGED fees got grandfathered in, but the part where I DON"T get charged fees was not grandfathered in?'"

The embarrassed bank credited our writer with the bounced check fee and the $10 minimum balance charge.

-- Posted: Oct. 29, 1999