Consumerist: delinquencies

U.S. Debt Collecting Being Outsourced To India

Chris Walters — Thu, 24 Apr 2008 12:36:00 EDT

The New York Times looks at the blossoming foreign market for debt collection services, and describes a call center in India where the employees are reminded to bring up the 2008 stimulus checks when they call U.S. households, and where everyone claps three times when the first "deal" of the day is made (""Rajesh, for $35 a month for three months," the supervisor yells across the center.)

So far the market is still small—maybe 5% of collections—but the Times says more contracts are in the pipeline, and that companies are also looking to Mexico, Romania, and the Phillipines. Delinquent mortgage loans will probably continue to be handled in the U.S. because they involve complex state and federal laws, but "credit card, auto and other debt are prime candidates for collection overseas."

"Debt Collection Done From India Appeals to U.S. Agencies " [New York Times] (Thanks to SSH!)
(Photo: Getty)

Late Payments On Credit Cards Highest In Three Years

Chris Walters — Wed, 27 Feb 2008 09:44:02 EST

CardTrack.com says "the percentage of people delinquent on their credit cards is the highest it's been in three years," according to CNN. Over the past year, U.S. consumers have charged "more than $2.2 trillion in purchases and cash advances." The article gives the usual advice: Stop buying stuff! Pay more than the minimum! Use the debt snowball technique to pay off your cards efficiently! They also speak with a man from Credit.com who says keep your balances under 10% of your credit limit—in fact, a "utilization rate of no more than 7%" is optimal.

As a rule of thumb, you should try not to use more than 10 percent of your credit limit when making purchases. "The people with the best credit have a utilization rate of no more than 7 percent," he says.
If your credit utilization is 50 percent or more of your credit limit, you are doing some real damage to your credit score, says Craig Watts of Fair Isaac, one of the companies that provides credit scores. When the new FICO '08 scoring model is adapted in May, if you have a utilization of over 50 percent, you'll be penalized even more heavily.

May's just around the corner! If you're one of those people who lives and dies by your FICO score, you've got a couple more months to knock down that debt.

"When credit cards put you in jeopardy" [CNN]

RELATED
"Do-It-Yourself Debt Reduction" [Credit.com]
"The Debt Snowball Technique"
(Chart: CardTrak.com)

Gas Company Abandons Plan To Report Delinquent Customers To Credit Agencies

Chris Walters — Mon, 11 Feb 2008 20:25:03 EST

Last fall, CenterPoint Energy—Minnesota's largest natural gas supplier—announced it was considering reporting the payment histories of its customers to credit reporting agencies in an effort to reduce delinquencies. Advocates said this was a stupid idea, because the people who can't pay their gas bills are too poor to pay their gas bills, and derogatory credit only makes life worse for them. Now they've said they won't (at least for now). Good.

The Houston-based company, Minnesota's largest natural-gas utility, told the Star Tribune that it still considers credit reporting one of several appropriate ways to collect past-due payments. It also considers those collections crucial for keeping rates down for all customers.
But it has chosen not to begin such a program because "we feel it is important to focus our attention on exploring alternatives," the company said in a prepared statement.

(Thanks to Kris!)

"CenterPoint's credit-reporting plan is dropped" [Star Tribune]