Metro 2 is a credit reporting software system, and it is important to understand it so you know what goes on behind the scene of your credit report.

Businesses in the collection and credit industries who report consumer credit histories to the four credit report agencies must use the Metro 2 credit format. It was originally created in 1997 by the Consumer Data Industry Association (CDIA).

Metro 2 is designed to meet all the requirements of the Fair Credit Reporting Act (FCRA), the Fair Credit Billing Act (FBCA), the Equal Credit Opportunity Act (ECOA) and the Fair Debt Collections Practices Act (FDCPA).

Metro 2 provides a standard format to report all consumer information. The software performs validity checks on the accounts, insuring that the information entered is accurate, complete and compliant. It allows the collection or credit business to report information on consumers that cannot be located. Metro 2 makes provisions for the reporting of deferred payments and the transfer or sale of debt.

Metro 2 format software can be catered to specific industries and used by a business that has more than one industry. Businesses in the credit and collection industry must have their Metro 2 software tested and approved by each of the credit agencies that they report to. Accounts are submitted on a monthly basis and it is important that the software be kept up to date.

A third party consumer and business credit reporting service may be used by many businesses that carry accounts, such as jewelry stores or auto dealers. The credit reporting service will use Metro 2 to process the data into the correct format before submitting it to the credit report agency for the smaller business.

It’s important to remember that Metro 2 reduces everything to a 2-digit code.  If you have a dispute with anything on your credit report, the entire letter you send in support of that dispute is reduced to 2 digits.  If those digits are improperly entered then your dispute will be incorrect.  Say a lot in your dispute, plead your case, offer proof . . . it all comes down to 2 digits.

Understanding your credit report shouldn’t be confusing. You would think that since they all use the same, standard format, credit reporting software system, that the scores would be the same.

But each credit bureau uses a different credit scoring model. Add to that the fact that not all creditors report your debt to all three credit reporting agencies and you have the recipe for confusion. On top of this information, you should be aware that the credit score you get is not the same one that is given to businesses.

Let me try to explain what’s going on.

You’ve heard of the term FICO score. The FICO score, named after the Fair Isaac Corporation, is determined by using information from all three major credit reporting bureaus. FICO has a scale of 300 to 850 and is the same score that is sold to businesses.

Think of your FICO score as the main house that contains all the other little credit scores. This is the one a business sees when it requests a credit score report. Each of the credit reporting bureaus have their own room in the main house. They get to fix that room up any way they want to.

Equifax wants to be just like FICO. In fact they are the only credit reporting bureau that sells the FICO score to consumers except they refer to it as BEACON.

At TransUnion, you get a personal credit score based on the FICO model and called Empirica. Their score ranges from 300 to 850.

Experian uses a their own consumer credit score based on the PLUS score system.  Their scores range from 330 to 830

Each of your creditors reports to the credit bureaus.  They may report to all of the credit bureaus or just one of the credit bureaus. They might report incorrect information or they might not report any information.
Each credit score is different and you have no control over how your credit score is determined. What you can control are the details of your credit history.

The Federal Trade Commission announced that it returned approximately $12.7 million to consumers this week. Consumers who were all ready struggling with financial hardship when they turned to AmeriDebt and DebtWorks for help and understanding.

This was the largest debt management deception case brought by The Federal Trade Commission, and it’s finally paid off for the innocents suckered by late-night TV ads and direct mail barrages promising debt freedom.

According to ConsumerAffairs.com, AmeriDebt Counsel Rob Herrell stated that he was surprised and disappointed about the lawsuit filed by Attorney General Jay Nixon.

What about the consumers who were deceived by AmeriDebt? They must have been surprised and disappointed as well.

All 287,000 of them.

In addition to the almost $13 million, another $7 million will be returned to consumers as the result of class action settlements with related credit counseling services. More than 460,000 consumers who obtained a debt management program with one of 11 credit counseling services who worked through DebtWorks will qualify for compensation.

AmeriDebt was supposed to be a non-profit credit counseling service. Missouri Attorney General Jay Nixon charged that AmeriDebt, DebtWorks and other related credit counseling agencies, deceived consumers with high hidden fees and a lack of any real credit counseling. The employees of these credit counseling agencies had little or no training and were paid on commission. Instead of counseling the consumers, they sold debt management programs that charged a monthly fee and lasted 3 to 5 years.

The monies from some of the debt management programs were secretly transferred into for-profit businesses owned by Andris Pukke, the owner of AmeriDebt.

Pukke was barred from working in the debt management, credit counseling and telemarketing. Unfortunately, this remedy came along a bit too late for the scores of people who fell victim to his scams and shell games.

There is a sudden, renewed sense of urgency in the debt collection efforts of banks and credit card companies.

In this time of increased foreclosures, rising unemployment and a rocky economy, more consumers are defaulting on their credit card payments. According to the Wall Street Journal, the percentage of bank credit-card accounts that are delinquent rose to 4.51% in the first quarter and they expect the problems to get worse.

Credit card companies and banks are responding by stepping up their debt collection efforts. They are pursuing past due accounts more aggressively and starting collection practices earlier rather than waiting for accounts to go more seriously past due.

It is not uncommon to get a phone call from a debt collector when you’re just a few days behind on payments, as opposed to a few weeks as was previously the case.

Creditors are also turning delinquent accounts over to third party, collection agencies sooner. The debt collection agencies may not be as easy to deal with as the original creditor. These agencies are also subject to the Fair Debt Collection Practices Act.

So what are people doing? They’re ignoring those phone calls in droves.

InsideARM.com reports that Gwenn Bezard, research director for Aite Group, is noting that creditor and collector efforts are falling short of the mark.

Some financial institutions are becoming more creative in their attempt to reach borrowers. They might offer a free phone card or gift card that can only be activated when they call the company. Call to redeem your card and you’re faced with a barrage of payment plans, waived fees, lower payments and flexible interest rates. Citigroup is even offering settlement programs to those who are extremely behind on their payments.

Illegal? Deceptive? I think so, but it depends on the way you’re approached. If you get a letter from a debt collector promising you a free gift and not clearly disclosing that the letter is an attempt to collect a debt, it may be in violation of federal law.

Consumers may find that credit card companies and banks will be more willing to help if they communicate sooner and work with lenders to make payments.

You may also find yourself the target of repeated attempts to scare you or trick you into payment. As always, if you think you’re being misled it’s best to call on an experienced consumer protection lawyer to review your situation.

The economy is sinking like a mob informant with cement shoes.  Credit card companies are seeing delinquencies shooting through the roof.  Everyone is tightening their belts.

It’s a perfect time to negotiate your credit card rates.

Think about it - if you’re paying the credit card company on time and have a good track record, they want to keep you doing so.  If they don’t make you happy, you may either pay off the debt in full (bad for them because they lose all the income) or default (bad for them because they lose all the income).

If you think “scripts” are just for actors, then chances are that you’ve never tried to negotiate with your lenders. Many customers mistakenly believe that once they’ve agreed to credit card terms, no matter how unreasonable, they are stuck with them for the foreseeable future. Prime rate goes up . . . prime rate goes down . . . and you may feel as though you’ve been tossed into a sea of debt without a paddle. If this sounds like your situation, then a little bit of “acting” may go a long way toward renegotiation of your credit card rate. The following script is excerpted from an article from Bankrate.com and can be adjusted to fit your own situation as needed :

Hi, my name is [Your Name]. I am a good customer, but I have received several offers in the mail from other credit card companies with lower APRs. I want a lower rate on my card, or I will cancel my card and switch companies.

If you aren’t able to get the rate you’re hoping for, ask for a manager, and if that doesn’t work, try back on another day to see if you get a customer service representative that is a bit more sympathetic to your cause.

While rate renegotiation may not work for everyone (especially if you’ve been late on payments), it never hurts to try; and if it works, you’ve just saved yourself a substantial amount of money in a relatively short amount of time.