credit: cards, records, and debt - suze orman : personal financial

SUZE ORMANThe Ultimate Protection Portfolio™

Credit: Cards, Records, and Debt

This product provides information and general advice about the law. But laws and procedures change frequently, and they can be interpreted differently by different people. For specific advice geared to your specific situation, consult an expert. No book, software, or other published material is a substitute for personalized advice from a knowledgeable lawyer licensed to practice law in your state.

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Copyright © 2003 by Suze Orman Media, Inc. All rights reserved.Suze Orman® is a registered trademark of Suze Orman.Suze Orman—The Ultimate Protection Portfolio™ is a trademark of Suze Orman.People First, Then Money, Then Things® is a registered trademark of Suze Orman. Published and distributed in the United States by Hay House, Inc., P.O. Box 5100, Carlsbad, CA 92018-5100 • Phone: (760) 431-7695 or (800) 654-5126 • Fax: (760) 431-6948 or (800) 650-5115 • www.hayhouse.com®

All rights reserved. No part of this guidebook may be reproduced by any mechan-ical, photographic, or electronic process, or in the form of a phonographic recording; nor may it be stored in a retrieval system, transmitted, or otherwise be copied for public or private use—other than for “fair use” as brief quotations embodied in articles and reviews without prior written permission of the publisher. The author of this guidebook does not dispense legal advice. The intent of the author is only to offer information of a general nature. In the event you use any of the information in this guidebook for yourself, which is your constitutional right, the author and the publisher assume no responsibility for your actions.

ISBN 13: 978-1-4019-0345-9ISBN 1-4019-0345-2

16 15 14 13 12 11 10 9 8 71st printing, November 2003

7th printing, March 2016

Please locate and collect the documents listed in the “Credit Documents Checklist” below and file each document in the “Credit” folder of your Protection Portfolio.

It’s important that you file away a copy of your current credit report and your FICO score (credit score), as well as photocopies of your active credit cards, in the Protection Port-folio. Why? The reason to keep an up-to-date copy of your credit report—a document that contains vital personal finan-cial information about you—is twofold. First, it’s important

q �Photocopies�of�your�active�credit�cards,�both�front�and�back,�with�800�service�numbers�visible

q An�up-to-date�copy�of�your�credit�report�

q An�up-to-date�copy�of�your�FICO�score

q Copies�of�letters�closing�credit-card�accounts

CREDIT DOCUMENTS CHECKLIST

Credit: Cards, Records,

and Debt

S u z e O r m a n — T h e u l T i m a T e P r O T e c T i O n P O r T f O l i O ™2

for you to regularly check your credit report—long before you apply for a mortgage or other loan, say, and find that an error is creating a credit problem. Second, in case of your death, easy access to a current credit report will provide your loved ones with a list of all or most of your outstanding debts. That way, if the need arises for an authorized person to distribute your assets, he or she will have a record of every institution that claims you owe it money. As to your current credit cards, making a photocopy of both sides of each active credit card and filing the copies in the “Credit” folder of your Protection Portfolio will give you and your loved ones all the information needed to call and cancel or replace your cards in the event that something happens, either to you or to the cards.

Managing Your Expenses

A critical step to protect yourself and those you love is to secure your financial future. You can only do this if you have successfully gotten your debt under control. Before I can dis-cuss the documents that you need to have in place, you first need to deal with any outstanding debts. For many of us, debt is too big a part of our overall money picture not to give it the respect that it’s due. If you’re one of the few people who are not in debt, then congratulations! You can skip to page 18. But if you do have debt—especially credit-card debt—I urge you to do all of the exercises in this booklet. The first step is to make sure you have the money you need to pay all of your monthly expenses. To do this, you’ll need to figure out very carefully just how much your expenses amount to. I don’t want you to guess or estimate, but to work from real figures from the past year. This exercise will take some time to do, but let’s put time and money in perspective: You work

at least 40 hours a week to earn your money. I’m asking you to spend just a few hours now so you can truly know where you stand financially. (For your convenience, a copy of all of the exercises about managing your debt can also be found on the Must Have Documents Website as well as a home budget calculator.)

Exercise: My Monthly Expenses

Instructions:

1. Go through your records and receipts for the last complete calendar year. This includes all checks, all credit-card charges, and all ATM withdrawals and cash advances. You will have to record every expenditure you made in those 12 months. If you no longer recall what a certain dollar amount went toward, add it under “miscellaneous.”

2. Record the amount you spent month-by-month in each category. If any categories relevant to your spending are missing, add them in the “Miscellaneous” space at the end of the chart.

3. After you’ve filled in all the categories for the entire 12 months, add up the total for each cat-egory and write it in the next-to-last column (“Year’s Total”).

4. For each category, divide the “Total Yearly” sum by 12. This will give you the average amount you spend each month. Record this figure in the last column.

c r e d i T : c a r d S , r e c O r d S , a n d d e b T 3


MY MONTHLY EXPENSES

Mortgage/PMI/rent

Property�taxes,�property�insurance

Home�maintenance,�association�or�condo�fees

Utilities�(gas,�electric,�oil,�water)

Home�systems�(burglar�alarm,�pool,�spa)

Telephone,�cellular�phone,�cable

Gardening,�lawn�care

Food,�alcohol,�restaurants,�home�entertainment

Medical,�dental,�optometric

Pet�care,�veterinarian

Insurance�(life,�health,�auto)

Automobiles

Transportation�(gas,�parking,�tolls)

Clothes,�shoes,�jewelry

Dry�cleaning,�laundry�service

Hair,�manicure,�facial

Alimony,�child�support

Children’s�education,�child�care

Job�training,�education

Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. TotalYearly Mo.Average byCategory byCategory�� (divide�the�Total�Yearly� � � � � � � � � � � � � by�12)


MY MONTHLY EXPENSES

Mortgage/PMI/rent

Property�taxes,�property�insurance

Home�maintenance,�association�or�condo�fees

Utilities�(gas,�electric,�oil,�water)

Home�systems�(burglar�alarm,�pool,�spa)

Telephone,�cellular�phone,�cable

Gardening,�lawn�care

Food,�alcohol,�restaurants,�home�entertainment

Medical,�dental,�optometric

Pet�care,�veterinarian

Insurance�(life,�health,�auto)

Automobiles

Transportation�(gas,�parking,�tolls)

Clothes,�shoes,�jewelry

Dry�cleaning,�laundry�service

Hair,�manicure,�facial

Alimony,�child�support

Children’s�education,�child�care

Job�training,�education



MY MONTHLY EXPENSES

Professional�fees�(legal,�accounting,�counseling)

Technology�(computer,�printer,�Internet�connection)

Credit-card�balances,�loans�(other�than�mortgage)

Bank�fees,�credit-union�fees

Postage,�shipping

Entertainment�(video�rentals,�movie�tickets,�etc.)

Recreation�(sporting�events,�hobbies,�health�clubs)

Books,�subscriptions

Vacations

Donations

Lottery

Gifts�(holidays,�weddings,�birthdays,�baby�showers)

Cigarettes

ATM�cash�withdrawals

Seasonal�expenses�(firewood,�summer�camp)

Weekly�expenses�(lessons,�house�cleaning,�babysitting)

Miscellaneous

TOTAL AVERAGE MONTHLY EXPENSES (ALL CATEGORIES) $


5. Total all the figures in the “Monthly Average” column. Write that amount in the final space, labeled “Total Average Monthly Expenses.”

Keep in mind that you’re doing this exercise to get an average amount you spend per month. There will be months when you spend less and months when you spend more, so I want you to work from the average figure. Doing this exercise completely is one of the only ways you can really get a grip on your expenses.

Exercise: My Actual Income

Knowing your monthly expenses is only one part of the equation. You also need to know if your monthly income is enough to pay for your monthly expenses. In the “My Actual Income” chart that follows, I want you to write down all the income that you have coming in from all sources. Please cal-culate only the amount that you’re fairly certain will continue coming in for at least two more years. If you lent someone money, for example, and she has been paying you back regu-larly but owes only three more payments, don’t include this figure. Or, if you are working but are about to retire or be laid off, don’t count the few paychecks you have left. When you have filled in the yearly amount of each source of income, total all the figures and record it in the space pro-vided. Then take that total and divide it by 12. This final figure is your average monthly income after taxes.


MY ACTUAL INCOMEIncome YearlyAmount

Yearly�earnings�after�taxes�and�deductions

Predictable�bonuses

Social�Security�income

Disability�income

Bond�interest�income

Other�interest�income

Dividend�income

Rental�income

Gifts�from�parents�(if�regular�and�reliable)

Loan�repayments�to�you�(if�regular�and�reliable)

Pension�income

IRA�income

Alimony�and�child�support

Miscellaneous

YEARLYTOTAL

AVERAGEMONTHLYINCOME


Exercise: Know Where You Stand Financially

Let’s see what the information you’ve just gathered means. In the following worksheet, “Know Where You Stand Finan-cially,” write your Average Monthly Income figure in the first row. Write your Average Monthly Expenses figure in the second row. Subtract your expenses from your income. Record the resulting figure in the “Difference” row. This figure reflects your monthly deficit or excess.

KNOW WHERE YOU STAND FINANCIALLY

Monthly�Average�Coming�In� $

Minus�(–)

Monthly�Average�Going�Out� $

Difference�Between�the�Two�� $(monthly�sum�deficit�or�excess)

You may have already known what you’ve just put in writ-ing. If so, I’m proud of you! If you’re like most Americans, however, you’re either pleasantly surprised or (more likely) at least a little shocked. In fact, I’ve found that before doing this exercise, most people underestimate their average monthly expenses by at least $500 to $1,500 a month. So consider this a “Thanks, I needed that” moment. With the information you’ve just gathered, you’re ready to get busy to protect your financial future and those you love. If after doing these last two exercises you discover that you have more than enough income to pay your expenses, then you’re doing great. You can skip to page 14. But even if your income exceeds your expenses, you may want to do the following


“Trimming Expenses” exercise because it’s in your best interest to know how to lower your expenses so you can either invest or protect your income. If your result in the previous calculation shows that you have a deficit, you can either find a way to earn more income or cut back on expenses.

Exercise: Trimming Your Expenses

1. I want you to go back over your list of expenses and put a check mark alongside every item on the list that could be adjusted, if need be. Gener-ally, there are three areas that can be trimmed fairly painlessly: luxuries (meals out, recreational expenses, and entertainment); penalty fees (late fees on debt payments); services you can per-form yourself (housecleaning, laundry, mani-cures, accounting, and even making your own coffee). Only you know how you’re spending the money that you don’t have.

2. Now go over the items you’ve checked and

choose ten painless changes you could make to your present spending habits. Write these in the “Savings Action” column of the “Expenses to Trim” worksheet, and be as specific as pos-sible (for example, “Wear clothes one more time before taking them to the dry cleaner,” or “Reduce the housecleaning service from once a week to once every other week”). But don’t fill in a dollar amount yet.


3. I want you to commit to one month of cutting the expenses you listed. During that month, carry a small notebook with you at all times. Every time you would ordinarily spend money on one of these items, jot down the amount you didn’t spend. For example, if you usually get two manicures a month, but this month you chose to do your own manicures, record the amount you saved ($15 x 2 = $30).

4. At the end of the month, add up the total amount of savings for each item and write that amount in the “Money Saved” column.

5. Add those totals to arrive at your total savings for the month. Record that figure in the space provided on the worksheet.

6. Multiply your total savings by 12 to figure out how much you could save in just one year with these few painless changes in your habits, and write that figure down as well.


You’ll be amazed to see how a few minor changes can really add up. I hope you’ll also see that there are many other ways you can modify your spending habits to decrease your expenses. Once you’ve cut enough so that your income exceeds your expenses, don’t stop! Keep up the expense cutting and use the money you save to build up an emergency fund (see page 19). Once you’ve set up an emergency fund, you can use your “Money Saved” for long-term investments that will help you reach your financial goals.

EXPENSES TO TRIMSavingsAction MoneySaved

1.� $

2.� $

3.� $

4.� $

5.� $

6.� $

7.� $

8.� $

9.� $

10.� $

TOTALMONTHLYSAVINGS $

TOTALYEARLYSAVINGS� $


Credit-Card Debt

In my opinion, nobody can afford to carry credit-card debt, even if he or she has the money to keep up with minimum monthly payments. Credit-card debt is bondage—and that’s not a lesson in life that you want to carry with you. When you buy on credit, you’re paying for your present-day desires at the expense of your future needs. That makes you a slave to the past, shelling out current money for things that are losing or have already lost their value. If you owe money to credit-card companies, there are two keys to getting out of that debt: Pay more than the minimum, and get the lowest interest rate possible. To illustrate this point, take a look at the chart below that shows how long it takes to pay off a $4,000 balance if you’re paying $100 per month toward that debt—and how much money you’ll be shelling out in interest.

TIME & INTEREST TO PAY OFF A $4,000 CREDIT-CARD BALANCE

Atthisinterestrate Paying$100every Andyou’llpay month,itwilltake thismuchin youthislongtopay interest

5.9%� 45�months� $465

7.9%� 47�months� $648

9.9%� 49�months� $874

12.9%� 53�months� $1,257

15.9%� 58�months� $1,736

18.9%� 63�months� $2,362


As you can see, interest rates can make a huge difference in how much money you’re actually paying, so it’s essential that you switch to a credit card with the lowest interest rate possible. Credit-card companies really want your business, and if you’re a heavy user with good credit history, they’ll make it easy for you to transfer a balance to the card they’re offering. You can usually lower your interest rate with a few phone calls and less than five minutes of paperwork. But keep in mind that those too-good-to-be-true offers that flood your mailbox are usually just that: too good to be true. Open and read every credit-card offer you receive in the mail with a very skeptical eye. An important note about moving to a lower credit-card rate: Notice that I said transfer. I don’t want you to close out any credit accounts. As crazy as it sounds, that can actually hurt your credit score.

Action Plan to Get Out of Credit-Card Debt

If you have credit-card debt and don’t have enough savings outside of your retirement accounts to pay it in full, use the action plan below to determine the best way for you to pay off your debt. For your convenience, your Must Have Documents Website includes an “Action Plan to Get Out of Credit-Card Debt” calculator.

Step 1: Determine how much you can pay. Figure out what is the absolute most you can afford to pay monthly toward your credit-card debt. If necessary, refer to the expense and income worksheets you filled out on the previous pages. Write this figure in the space provided.Largest amount I can put toward credit-card debt: $ _________


Step 2: Determine how much debt you have. Please gather all of your current credit-card statements. Using the chart below (or the calculator on the Website), write down all credit cards on which you owe a balance. List the card that charges the highest interest rate first, then the card with the next highest rate, and so on. To the right of each credit-card account name, record that card’s minimum monthly payment. For example, if the minimum payment on your statement is $50, you should write $50 in that column. (Although the minimum payment will decrease as you pay down your debt, I want you to keep paying the minimum you’ve recorded here—in this case, $50—plus an additional sum I’ll talk about in a minute.) In the next column, write the interest rate. In the final row, record the entire balance that you owe on the card.

MY CREDIT-CARD DEBTCreditor Minimum Interest Balance Monthly Rate Owed Payment

TOTALBALANCEOWED $


Once you’ve filled in this information for all of your cards, add up all the minimum payments and write the total in the space provided. Do the same for all the balances.

Step 3: Determine how much extra money you can pay toward your debt. Write the figure from Step 1 in the space provided below. Fill in the sum of your minimum monthly payments from Step 2 in the second space. Then subtract your minimum monthly payment total from the “Largest amount” figure. The result will tell you how much extra money you can use each month to pay down your debt.

Let’s say, for example, that the largest amount you can apply per month to your credit-card debt is $400, and your total minimum monthly payments for all your cards is $275. If you subtract $275 from $400, you’ll see that you have $125 extra available.

Step 4: Commit to paying extra. Instead of treating your extra available money as a “bonus check” for spending, commit to putting those funds toward paying down your credit card with the highest interest rate. Meanwhile, on all the other credit

Largest�amount�I�can�put�toward�credit-card�debt�� $

minus�(–)

Minimum�monthly�payment�total�� $

EXTRAMONEYAVAILABLETOPAYDEBT�� $

EXTRA MONEY I CAN PUT TOWARD DEBT


cards, continue to pay just the minimum required—nothing more. Do this every month until the first card is completely paid off. When the first card is paid off, remember not to close the account, since it can hurt your FICO score (see page 36 for details). Put the card in a safe place where you won’t use it; your new goal is to not run up any new balances that you can’t pay.

Step 5: Continue to pay off credit-card debt. Now repeat this process with the second card on your list. This time, however, add whatever total amount you were paying toward the balance on the first card (now paid off), and apply that plus the mini-mum monthly payment you’ve already been paying toward the second card. Continue paying the minimum on all other cards. When the second card is paid off, begin your payment cycle all over again with each of the remaining cards. This way, you’ll keep rolling down your payments until they’re all gone.

Lost or Stolen Credit or Debit Cards

What’s your responsibility if one of your cards is lost or stolen? Well, it depends on whether the card is a credit card or a debit card. If it’s a credit card, then (in most cases) your liability for unauthorized credit-card charges is $50 per card. To take advantage of the law’s consumer protections, you must contact the creditor; you can typically file a dispute online, and you will be sent paperwork to complete. Make sure you include your name, address, account number, and a description of the billing error, including the dollar amount and date of the error. You must contact the creditor within 60 days after the first bill containing the error was mailed to you. This is why it’s critical to be aware of when your billing statements are due and immediately follow up when your bills don’t arrive on time. The


creditor must acknowledge your complaint in writing within 30 days of receiving it unless the problem has been resolved. If you haven’t received an acknowledgment after 30 days, get on the phone and make them focus on your issue. The creditor must resolve the dispute within two billing cycles (but not more than 90 days) after receiving your letter. For a debit or ATM card, your liability is limited to $50 if you report your card lost or stolen within two business days. After those two business days, you may be liable for up to $500 of what the thief withdraws—if you report your ATM card lost or stolen within 60 days of receiving a statement showing an unauthorized electronic-fund transfer. If you wait more than 60 days, you could lose all the money that was taken from your account. In cases where your card is not lost or stolen but unauthorized charges are made using that card, you will not be liable for the charges if you report the fraudulent charges within 60 days.

Saving for an Emergency Fund

EMERGENCY FUND MINIMUM

Total�Average�Monthly�Expenses�(from�page�7)�$��x�8�=

$��Emergency�Fund�Minimum�

After you’ve paid off your credit-card debt, it’s important that you set up an emergency fund as soon as possible. I would like you to plan to put aside enough money to cover at least eight months of your expenses in an emergency fund—in other words, I want you to have at least eight months’ worth of cash saved. Yes, that’s right: Eight whole months of expenses should be stashed in a nice, safe savings account. I no longer believe


that the three- to six-month time frame that has been tradi-tionally recommended is enough. For one thing, because the economy has changed and job layoffs have become more prev-alent, the average time it takes to find employment is getting longer and longer. A problem you may encounter is that you find it hard to save—and can’t imagine setting up an account with eight months’ worth of expenses in a short amount of time. Well, my friend, if this is the case, then the easiest way for you to create an emergency fund is simply to take every extra penny you have, put it into a federally insured bank or credit union savings account, and save it there. You have to make a decision: Which means more to you—having a Starbucks coffee this afternoon and going to the movies tonight, or knowing that you and your loved ones will be protected even if you lose your job or get sick? Doing what’s right for you may mean giving up what you want right now to pay for what you could need later on. I hope you decide to do this, for you’ll be amazed at how much control over your life you will feel with your emergency fund standing behind you.

Ramifications of Using a Home Equity Line of Creditas an Emergency Fund

When you’re in dire straits, conventional financial wisdom would have you use a home equity line of credit first. I recom-mend, however, that you weigh your alternatives very carefully. If you lose your job and your prospects for getting another one in the near future really don’t look good, using an equity line of credit may not be the best choice for you. That’s because an equity line of credit is a secured loan—it’s secured with the deed to your home—while credit-card debt is unsecured.


Now imagine this: You’ve taken out and used up your entire $10,000 equity line of credit. You’ve also used up all the cash advances from your credit cards. You’re out of money and have tapped all the equity in your home. Guess what? If you can’t make your payments on the equity line of credit, the bank will most likely foreclose on your home. We have all tragically seen this happen often in the wake of the financial crisis that began in late 2008. Now what are you going to do? On the other hand, if you take an advance from a credit card and find that you can’t afford to pay it back, the credit-card company can’t take your home away from you. They can sue you, of course, but probably will only do so if they think they can get money from you. If they sue you and win, they’ll put a lien on your home, but they can’t force the sale (foreclosure). A lender with an equity line of credit can force the sale and foreclosure of your home. So give this some serious thought before you quickly tap an equity line of credit. Bear in mind that cash advances are expensive ways to get cash. The credit-card companies charge you the highest inter-est rate they can on cash advances—usually on top of a 2 to 5 percent fee. You get no grace period with a cash advance, so interest charges start accruing right away. Even so, you need to weigh the risk of losing your home against simply paying a higher rate of interest on a credit-card cash advance to get you by. Also, if things turn around for you and you get another job in which you feel secure, you can consider paying back your credit-card advances with your equity line of credit.

Credit-Counseling Services

If you’re in severe credit-card debt, you may want to con-sider seeking out the help of a reputable credit-counseling


service. For a fee, a counselor will sit down with you and discuss all the elements of your debt. Sometimes he or she will even negotiate on your behalf, establish a debt-management plan, and advise you of the possible consequences of declaring bank-ruptcy. But please be very careful in the counseling service that you select because all credit counselors are not the same. The credit-counseling industry today has become increas-ingly competitive, given that credit-card debt in the United States now tops $730 billion. All too often, reputable agencies are losing out to companies that are in the “nonprofit” credit-counseling business to make quick money. Instead of offering a range of diagnostic and counseling services, these companies sell debt consolidation as a solution for nearly every person with debt problems. Some of the less reputable credit-counsel-ing agencies often cause more harm than good with improper advice, deceptive practices, excessive fees, and abuse of their nonprofit status. That being said, if you find you need help, two of the best credit-counseling services, in my opinion, are the National Foundation for Credit Counseling (call 800-388-2227, or log on to www.nfcc.org. A link to this Website can be found on the Must Have Documents Website) and the Financial Counseling Association of America (fcaa.org 866-694-7253). These people are experienced, helpful, and relatively inexpensive to use. They may even be able to negotiate a lower rate or a repayment sched-ule for you. If you decide you want to get help from a credit counsel-ing service, ask the following questions before signing any contract:


• How are the counselors trained? What qualifica-tions do they have?

• Does the agency protect consumer privacy? Do they sell consumer information to others?

• Ask about both debt-management plans (DMP) and non-DMP services. A DMP isn’t likely to work for you if you’re most concerned about secured debts, such as home or car loans. But you may benefit from non-DMP counseling and/or diagnostic services.

• If a DMP isn’t right for you, ask about the other services the agency provides. Be very cautious if the agency says that they only do debt consolida-tion or debt-management plans.

• If you’re interested in a DMP, ask how the plans work. What concessions are likely? Will the agency help with all of your unsecured debts? Can you get regular account information? How often are payments made? How long is it likely to take to complete the plan?

• Ask about any educational courses or seminars the agency provides.

• If the agency tells you a fee is voluntary, get spe-cifics on what that means. Find out how much is the most you’ll be paying the agency. If the agency is reluctant to talk about fees, you should look elsewhere.


• Ask about how working with a credit counselor will affect your credit rating.

Credit Reports: How to Get a Copy of Your Credit Report

Your credit report is a compilation of information from the electronic credit file that the major credit bureaus keep on you. It contains your credit history over the last seven to ten years, and includes your address, phone number, Social Secu-rity number, past addresses, employment history, marriages and divorces, current credit-card accounts and outstanding loans, any history of late payments, any liens or judgments against you, and any bankruptcies. Periodically—at least once a year—you should check to make sure that all the informa-tion—including any paid-off loans or closed accounts—is current and accurate. If the status of any information on your credit report has changed, replace the old credit report in your Protection Portfolio with your new one. At your request, a credit bureau must provide you with a copy of the information in your file, along with a list of all parties that have requested it recently. You can obtain one free credit report a year from each of the three major credit bureaus by visit-ing www.annualcreditreport.com (your Must Have Documents Website contains a link to this site). You can also request your report by phone at 877-322-8228, or by mail by downloading the form from the Website and mailing it to:

Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281


If you’ve been turned down for credit on the basis of infor-mation supplied by a credit bureau and you request a copy of your credit report within 60 days of receiving notice of that action, you can apply for a free copy through the credit-card company or bank that turned you down. (On your Must Have Documents Website, you’ll find the form “Request a Credit Report” already pre-addressed for mailing to one of the three major credit bureaus.) The three big credit bureaus are:

Equifax P.O. Box 740241Atlanta, GA 30374800-685-1111www.equifax.com

ExperianP.O. Box 2002Allen, TX 75013888-EXPERIAN (888-397-3742)www.experian.com

TransUnion2 Baldwin PlaceP.O. Box 1000Chester, PA 19016800-888-4213www.transunion.com

How to Correct a Mistake on Your Credit Report

If you find a mistake on your credit report, fill out the “Request for Reinvestigation” form that will accompany your


mailed credit report, or will be offered as an option when you view your credit report online. If you don’t receive this form in the mail, you can write to the credit bureau and ask for one, or simply open the Must Have Documents Website, where you’ll find the form “Request Reinvestigation.” When filling out the form, list each incorrect item and explain how and why it’s wrong. Be sure to make and keep a copy of the form before mailing it to the credit bureau. Reinvestigations are free, and the credit bureau must complete its investigation within 30 days of receiving your complaint (extended to 45 days if the bureau receives additional information from you during the 30-day period). In case there’s information missing from your credit report that you would like to see included—such as a loan that has been repaid—write a letter asking that this information be added, or simply use the “Credit Report Missing Information” form on your Must Have Documents Website. If you don’t hear from the credit bureau within 30 days, send them a follow-up letter using the form supplied on the Must Have Documents Website, “Request Follow-Up After Reinvestigation.” You should also submit a complaint to the federal Consumer Financial Protection Bureau at http://www.consumerfinance.gov/complaint/#credit-report.


If the credit bureau won’t amend your credit report after the reinvestigation, write to the original creditor. If the credit bureau responds by claiming that the creditor originally report-ing the information has verified its accuracy, and concludes that the information will remain on your credit report, then you’ll need to take more aggressive action. Send a letter to the creditor associated with the false information and demand that the creditor ask the credit bureau to remove it. (Use the form “Removal of Incorrect Info by Creditor” on your Must Have Documents Website.) If the information was reported by a collection agency, send the agency a copy of the letter, too. Be sure to keep a copy for your files. Once the creditor agrees that the information on your credit report is incorrect, make sure that it’s removed. Print the “Creditor Verification” form supplied on the Must Have Documents Website and send it to the credit bureau. Include a copy of the creditor’s letter acknowledging the error; or, if you spoke by phone to a representative of the creditor company, include that person’s name, title, and phone number.

How Long Does Information Stay on My Credit Report?

In most cases, all negative items will eventually be removed from your credit record. Below is a list of how long each type of information may, by law, remain in your file. If an item remains longer than it should, you can use the “Request Reinvestiga-tion” form (offered by the credit bureau when you request your report) to ask that it be deleted.


HOW LONG INFORMATION STAYS IN YOUR CREDIT REPORT

Itemincreditreport

Bankruptcies

Lawsuitsandjudgments

Accountssentforcollection(internallyortoacollectionagency)

Accountschargedoff

Paidtaxliens

Criminalrecords

Howlongitcanremainonfile

The�record�of�a�bankruptcy�may�remain�on�your�credit�report�for�no�longer�than�ten�years�from�the�date�of�the�last�activity�in�the�bankruptcy�procedure.�(Most�credit�bureaus�start�counting�the�ten-year�period�from�the�earlier�date�of�filing.)�Please�note:�Credit�bureaus�typically�report�successfully�completed�Chapter�13�bankruptcies�for�only�seven�years.

The�record�of�a�judgment�against�you�may�remain�for�up�to�seven�years�from�the�date�of�the�judgment,�or�until�your�state’s�statute�of�limitations�has�expired,�whichever�is�longer.�(Typically,�a�credit�bureau�deletes�records�of�lawsuits�and�judgments�after�seven�years.)�

Any�record�of�an�account�sent�for�collec-tion�may�remain�on�your�credit�report�for�up�to�seven�years�from�the�date�of�last�activity.

These�may�remain�for�up�to�seven�years�from�the�date�of�last�activity.




How to File a Complaint with a Credit Bureau

If you can’t obtain a satisfactory resolution on a mistaken item on your credit report, you can file a complaint with the credit bureau or the Consumer Finance Protection Bureau (CFPB). Credit bureaus have departments that handle con-sumer complaints about incorrect notations that haven’t been removed through the usual reinvestigation process. Call one of the three big bureaus and ask to speak to a supervisor to con-nect you to this department. If you were seriously harmed by a credit bureau—for example, if it continued to give out false information after you requested corrections be made to your credit report—you also have the option to sue. The Fair Credit Reporting Act, or FCRA, allows you sue a credit bureau for negligent or willful noncompliance with the law within two years of the time when the bureau’s harmful behavior first occurred. You can sue for actual damages, such as court costs, attorney’s fees, lost wages, and, if applicable, intentional infliction of emotional distress. In the case of truly outrageous behavior, you can recover puni-tive damages—damages meant as punishment for malicious or willful conduct. Under the FCRA, the court decides the amount of any punitive damages awarded.


Statutes of Limitations on Credit-Card Debt

A statute of limitation defines the limited period of time during which you can be sued for an act or event you engaged in, such as an auto accident or breaking a contract—including an obligation to pay a debt. Statutes of limitations for credit-card debt vary from state to state, but in every state the clock begins to tick from the date you failed to make a payment that was due—that is, as long as you never make another payment on that credit-card account. For example, if your state’s statute on credit-card debt is seven years, and your last payment was due on January 10, 2007, then the statute of limitations on your debt would run out seven years from that date—January 10, 2014—assuming you never made another payment.

Statutes of Limitations for Credit-Card Debt by State

Alabama� � 3�yearsAlaska� � 3�yearsArizona� � 6�yearsArkansas� � 3�yearsCalifornia� � 4�yearsColorado� � 3�yearsConnecticut� � 6�yearsDelaware� � 3�yearsDistrict�of�Columbia� 3�yearsFlorida� � 4�yearsGeorgia� � 6�yearsHawaii� � 6�yearsIdaho� � 5�yearsIllinois� � 5�yearsIndiana� � 6�yearsIowa� � 5�yearsKansas� � 3�years

Kentucky� � 5�yearsLouisiana� � 3�yearsMaine� � 6�yearsMaryland� � 3�yearsMassachusetts� 6�yearsMichigan� � 6�yearsMinnesota� � 6�yearsMississippi� � 3�yearsMissouri� � 5�yearsMontana� � 8�yearsNebraska� � 4�yearsNevada� � 4�yearsNew�Hampshire� 3�yearsNew�Jersey� � 6�yearsNew�Mexico� � 4�yearsNew�York� � 6�yearsNorth�Carolina� 3�years


North�Dakota� � 6�yearsOhio� � 6�yearsOklahoma� � 5�yearsOregon� � 6�yearsPennsylvania� � 4�yearsRhode�Island� � 10�yearsSouth�Carolina� 3�yearsSouth�Dakota�� 6�yearsTennessee� � 6�years

Texas� � 4�yearsUtah� � 6�yearsVermont� � 3�yearsVirginia� � 3�yearsWashington� � 6�yearsWest�Virginia� � 10�yearsWisconsin� � 6�yearsWyoming� � 8�years

Credit Scoring/FICO Score

It’s essential that you know your FICO score and take steps every day to maintain the best score possible. A FICO score is a numeric value assigned to your credit habits and history. Every American who has ever used credit now has a FICO score, and all creditors now use them. In the last few years, this score has become one of the most important criteria for evaluating you when you apply for credit. In general, the higher your score, the lower the interest rates you’ll pay on credit cards, mortgages, and car loans. Conversely, the lower your score, the higher the rates you’ll most likely pay. The FICO score is now also being used by landlords to evaluate applications. A landlord wants to know if you’re good at paying bills on time. Also, employers can check your credit report—with your permission—to help evaluate if you’re finan-cially responsible. Even if the job you apply for doesn’t involve finances, employers may still use your credit report to help discern how responsible and trustworthy you are. If you want to check your FICO score, you can now do so through the credit bureaus or at www.myfico.com, where the cost is $19.95 and includes a copy of your credit report. Even better, check your bank and credit card statements,


as many financial institutions now provide FICO scores for free. You may also be able to obtain one FICO score for free by signing up for a 10-day trial and cancelling your subscription before the 10 days have elapsed. On your Must Have Documents Website, you’ll find a link to www .myfico.com to apply for your FICO score online. Your FICO score can lower the interest rates on your credit cards. If your FICO score is really good (760 or above), then you should be aware that technically you qualify to get the best (the lowest) interest rates available on money you borrow. If this is the case and you’re paying a high interest rate on your credit cards, call your credit-card company and say that if they don’t lower your interest rate, you’ll switch to another card issuer. You might want to actually try to get a card with a better rate first, and when you do, make your current card company beat that rate. If it doesn’t, transfer your credit balance to the new account. But before you close down that first account altogether, read on to learn about how closing an account could hurt your score. To find the best interest rate on credit cards, log on to www.credit.com or www.bankrate.com.

FICO Score Ranges

FICO scores are on a scale from 300 to 850, but they’re basically divided into six ranges that correspond with interest rates that are issued by main lenders. In the wake of the finan-cial crisis, a FICO score below 660 or so may be considered “subprime” by many lenders, and you may be denied credit completely.


Score760–850700–759680–699660–679640–659620–639

To be eligible for the lowest interest rate on your credit cards, as well as other loans, you need to have a FICO score in the top range (760 to 850). If you’re below 660, you’re (in your lender’s mind) a greater financial risk. An important note: It makes no difference if your score is 761 or 849; all that matters is that you fall into the top range. So don’t drive yourself crazy trying to boost your score if you’re already in the top range.

How to Improve Your FICO Score

Raising your FICO score is a bit like losing weight: It takes time and there’s no quick fix. In fact, quick-fix efforts can back-fire. The best advice is to manage credit responsibly over time. Some basic guidelines are listed below. Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score. If you’ve missed payments, get current and stay current. Since paying your bills by their due date accounts for 35 percent of your FICO score, the longer you pay your bills on time, the better your rating. So it’s extremely important that you do everything you can to get your payments in on time, no matter what, especially in the months prior to applying for a loan. A late or missed payment close to the time that you apply for a loan will lower your score far more than an isolated late payment some years in the past.


If you’re having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t improve your score immediately, but if you can begin to manage your credit and pay on time, your score will eventually get better. Keep debt balances low. High outstanding debt—on credit cards, lines of credit, and other “revolving credit”—will adversely affect a score. Reduce your debt and your FICO score will go up. The goal here is to improve your credit score, and one way of doing that is to widen the gap between what you owe and what your credit limit is. The less you owe, the better your FICO score becomes. Pay off debt rather than moving it around. The most effec-tive way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but hav-ing fewer open accounts may lower your score. Pay cash for purchases. Your FICO score goes up when the credit bureaus see your balances going down. Especially in the months before you apply for a loan, be very careful how much money you’re putting on your cards. If you need to buy some-thing, buy it in cash if possible. Pay cash when you eat out, go to the movies, shop for groceries, or buy clothes. Hey—if you don’t have the money to pay cash for something at this point, just don’t buy it! All of these charges could hurt your FICO score. Don’t close unused credit cards as a short-term strategy to raise your score. When you close unused credit cards, it low-ers the amount of credit available to you without changing the amount of your debt. On paper, you appear to be closer to maxing out your credit cards. So closing unused credit cards could backfire and actually lower your score. Don’t open a number of new credit cards that you don’t need just to increase your available credit. FICO scores always take into account the following: how many new accounts you have; how long it’s been since you opened a new account; how many


recent requests for credit you’ve made (as indicated by inqui-ries to the credit-reporting agencies); and length of time since credit-report inquiries were made by lenders. When you open new credit cards that you don’t need, you can hurt all the factors listed above. That effect can outweigh any benefit of increasing your available credit, and may result in a lower FICO score. If you’ve been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you’re a new credit user. Do your rate shopping for a given loan within a focused period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. Typically, loan shopping that occurs within a two-week window will be treated as a single loan search. Reestablish your credit history if you’ve had problems. Open-ing new accounts responsibly and paying them off on time will raise your score in the long term. Have credit cards—but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly. Know that it’s okay to request and check your own credit report. This won’t affect your score, as long as you order your credit report directly from the credit-reporting agency or through an organization authorized to provide credit reports to consumers. Note that closing an account doesn’t make it go away. A closed account will still show up on your credit report, and may affect your score.


Closing an Account Can Hurt Your FICO Score

Closing an account could possibly hurt your score in two ways. The first way is in regards to your credit history, which accounts for 15 percent of your score. Your FICO score is based in part on your reported credit history. If you have four credit cards that you got more than ten years ago, you have a reported credit history on those cards that goes back ten years. If, how-ever, you decide to get a new card with a better interest rate and close down all the other accounts, your reported credit history has also been closed down. This will count against you. So sometimes, especially on the older cards on which you do not pay a yearly fee, you may be better off keeping them in a safe place and not using them. Closing them down and shortening your history may hurt your score. The second way that closing an account can hurt you is with respect to your debt-to-credit-limit ratio, which accounts for 30 percent of your FICO score. Imagine that you have four cards, each with a credit limit of $2,000, for a total combined credit limit of $8,000. In your wisdom, you have only ever used one of those cards, which currently has a balance on it of about $1,500. Your debt-to-credit-limit ratio (how much you owe compared to your total credit limit) is 19 percent ($1,500 divided by $8,000). If you think, Well, I’m not using my other cards, so I should just close them, be careful. In this example, if you have only one card open, which has a credit limit of $2,000, and you have a balance of $1,500, that makes your debt-to-credit-limit ratio 75 percent—bad news for your FICO score. Believe it or not, you just might be better off leaving the extra cards open and unused.


Using a Credit-Counseling Service Won’t Hurt Your FICO Score

In years past, using a credit-counseling service actually hurt your FICO score, but this isn’t as true today. The wise people at FICO have realized that people who use a credit counselor want to help themselves, and aren’t trying to avoid paying their bills. If you doubt that you can tackle your credit-card debt on your own and you feel that you need help, contact a reputable credit-counseling service (see “Credit-Counseling Services” on page 22).

Bankruptcy

Bankruptcy is a very serious action to take. You need to seek the best advice and think about it carefully, as it may or may not make sense for you in your particular situation. And a 2005 federal law has made it much more difficult to seek bank-ruptcy protection. The two types of bankruptcy are Chapter 7, in which all your debts (except student loans and taxes) are excused, and Chapter 13, in which filing for bankruptcy gives you the opportunity to work out repayment schedules that are fair to you and your creditors, while protecting your assets from being seized by your creditors. Even if your debts are forgiven, however, you must consider issues that go beyond your immediate financial difficulties. Please remember this: If you don’t pay off your debts, someone else will have to. In the case of debt to a bank or a credit-card company, the institution in question will have to absorb the loss you incur and will probably, in one form or another, pass that loss along to the rest of us. For example, your bankruptcy could affect the scoring system that credit bureaus use, which might mean that someone you don’t know will be turned down for credit.


You also need to think about what declaring bankruptcy will do to your credit report and FICO score. If you declare bankruptcy, you’ll find it extremely difficult—if not impos-sible—to get credit. It will be difficult to rent an apartment, buy a house, or rent a car without a credit card. It’s very likely that you’ll lose property you had counted on keeping for a long time. Job opportunities may be affected, too, which could lead to future financial problems. And in many cases, someone else—perhaps a friend, a spouse, or a cosigner—will be saddled with your debts. So before filing for bankruptcy, please understand the magnitude of what you’re about to do. Understand the sacri-fice you’re making, as well as what you stand to gain. Consider what you’re asking of others. Finally, if you decide that this is the only way out, I hope you’ll start over from a place of pride and courage, not one of shame.

Questions You Should Ask Yourself Before Filing for Bankruptcy

Filing for bankruptcy may help you resolve your debt prob-lem, but it won’t help those to whom you owe money. Imagine how you’d feel if someone who owed you a lot of money sent a letter saying, “Sorry, I’m bankrupt. I won’t be paying you back.” Ask yourself these questions:

• To whom do I owe money? Credit-card compa-nies? Friends? Businesses?

• Will I have to see or deal with any of these peo-ple or institutions after I file for bankruptcy? If so, how will that make me feel?


• What financial hardship, if any, will I cause for others if I take such a step?

• Is there absolutely no other way for me to climb out of debt, little by little, with work and deter-mination?

Chapter 7 Bankruptcy

Until now, Chapter 7 bankruptcy has been the most com-mon type of bankruptcy. Under Chapter 7, a court-appointed trustee assembles all your assets, sells them for cash, and then allocates and distributes the money to your creditors. You can hold on to any assets that are exempt under federal law and/or the laws of the state you live in. Basically, Chapter 7 is a way for you to erase most of your debts—but not without giving up some of your property. To file for Chapter 7, you must meet an income qualifica-tion. With the 2005 federal law, if your income exceeds your state’s median and you’re able to repay 25 percent of your unsecured debt, you would be unable to file for Chapter 7 bankruptcy and would be steered to Chapter 13 instead.

Debts You Won’t Have to Pay in a Chapter 7 Bankruptcy

After the bankruptcy proceeding, you won’t have to pay what’s known as dischargeable debt. The most common kinds of dischargeable debt in a Chapter 7 hearing include back rent you owe a landlord; outstanding utility bills, including gas, electric-ity, and phone; some court judgments against you (but not child


and/or spousal support, which can’t be discharged); credit-card, charge-card, department-store-card, and gasoline-card bills; documented loans from your friends or family; any outstand-ing legal or medical bills; and most, if not all, unsecured loans (here “unsecured” means debts that have no collateral attached to them).

Debts You’ll Have to Pay in a Chapter 7 Bankruptcy

Under Chapter 7, you’re responsible for what’s called non-dischargeable debt, including any loan that was issued, funded, guaranteed, or insured by a government entity or a nonprofit corporation (such as taxes, government fines, all student loans, and FHA loans). You’re also liable for any debt that the court determines you incurred due to irresponsible behavior or that was incurred long before you got into general financial trouble. Also, if you bought expensive items or took out a cash advance right before filing for bankruptcy, these debts will be consid-ered non dischargeable. You may be responsible for any secured debts—debts with collateral—and any debts arising out of trouble with the law. If you were sued for personal injury while you were driving drunk, or if you owe any debts because of traffic violations, fraud, larceny, embezzlement, assault, or libel, you’ll still be responsible for these debts after a bankruptcy proceeding. You’ll also be liable for any alimony or child- support debt. Your nondischargeable debts will be treated as if no bankruptcy had been filed, so a creditor can seek payment by any legal means.


How Chapter 7 Bankruptcy Will Affect Your Property

The types of property you stand to lose (called “nonex-empt” property) depend on the laws of your state. Among other things, however, you could very well lose (if applicable) your second home, your second car, any stock or bonds, CDs, money- market funds, and any valuable collections (such as stamps or coins) or heirlooms, as well as part of your marital estate. Exempt property is property that you get to keep after you file for a Chapter 7 bankruptcy. There are state exemptions and federal exemptions, and you can choose under which auspices you want to file after considering which offers you a higher allowance. Typically, you can keep your home up to a certain dollar value (in California, for example, the state exemption for a homestead allowance can range from $75,000 to $175,000); clothes; furniture and appliances; personal effects; jewelry; retirement plans and life insurance; and income from Social Security, disability, unemployment, welfare, and/or alimony. If you bought your car with an auto loan, then it’s considered a secured debt that can’t be discharged unless you give the car back—in other words, if you want to keep your car, you’ll have to keep paying your car loan. There are cases in which you may wish to “reaffirm” that debt.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is for people who are employed or are earning a regular income from a pension, an annuity, or some other source, but who are unable to pay the full extent of their debts. Chapter 13 is a repayment plan executed under the supervision of a court, and it involves an agreement on your part to pay back a portion of the money you owe, based on the amount of your income and the size of your debts. With the change in federal bankruptcy law, more people who once would


have filed Chapter 7 bankruptcy will be directed into Chapter 13 bankruptcy. If your secured debt is less than $1,149,525 and your unse-cured debt is less than $383,175 (whether you’re single or mar-ried), you may be eligible to file for Chapter 13. (These figures are accurate as of 2013.) Stockbrokers and commodity brokers are legally prohibited from filing for Chapter 13. If you find that you can’t honor your repayment schedule under Chapter 13—if you lose your job, fall ill, or get a divorce, for example—you should contact your court-appointed trustee immediately. Depending on your situation, the trustee may be able to get the court to cut you some slack, particularly if your inability to repay your debts is only temporary. If it looks like it could be long-term, the court has several options: It could alter your repayment schedule to reflect your new circumstances, it could discharge your remaining debts on the basis of hardship, or it could convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy.

A Comparison of Chapter 7 and Chapter 13 Bankruptcy

Advantages of Chapter 7 Bankruptcy. From start to finish, from the date you file to the date your debts are discharged, Chapter 7 is faster to complete than Chapter 13. But please note that the 2005 federal law now makes it much more difficult to qualify for Chapter 7. In a Chapter 7 bankruptcy, the amount of dischargeable, unsecured debt, such as credit-card debt, that you can erase from your life is unlimited, provided all assets and debts were declared and there’s no suspicion of fraud in your filing. Disadvantages of Chapter 7 Bankruptcy. The disadvantages of Chapter 7 bankruptcy are numerous. First of all, you have to give up your nonexempt property—including, say, a second


home or second car—hand it over to the court, and allow it to be sold. Even after you file under Chapter 7, some of your debts may survive (those deemed secured and nondischargeable, such as a car loan, and those debts that a creditor feels were incurred with the intention to defraud), and with respect to those debts you can still be approached by collection agencies. If a friend or a family member cosigned any of your loans, he or she will now be stuck with your debt—which is not at all nice. Once you’ve filed for Chapter 7, it’s very difficult to reverse the process. And, of course, like any bankruptcy, a Chapter 7 bankruptcy won’t look good on your credit history. Advantages of Chapter 13 Bankruptcy. The main advantage of Chapter 13 is that you get to keep all your property, whether it’s exempt or nonexempt. Your creditors can’t garnish your wages or send collectors after you, and you’re protected against foreclosure. In Chapter 13, you’re allowed to separate your debts by class, and different classes of creditors are due different percentages of payment. You also have a lot longer to pay back your debts than you do under a Chapter 7 (remember, not all of your debts may be dischargeable under Chapter 7), and if you arrange to pay back your debts in full, your creditors can’t go after anyone who has cosigned a loan. Disadvantages of Chapter 13 Bankruptcy. If your income is too low or irregular, you may not be eligible. To file for Chap-ter 13 bankruptcy, you must have a steady income. You’re also ineligible if your total debt burden is too high. Your secured debts can’t exceed $1,149,525, and your unsecured debts can’t be more than $383,175. You pay back your debts out of your own income, which can tie up that income for a long time. If debts survive after your bankruptcy is closed, you have to keep on paying back those debts. You could find yourself in this situ-ation for many years, which could have a serious effect on your future income.


How Often You Can File for Bankruptcy

I wouldn’t make a habit out of it! Legally, you can file for Chapter 7 bankruptcy once every eight years. Most Chapter 13 plans have three- to five-year payouts, so while technically you can file Chapter 13 as often as needed, it’s unlikely you’ll be filing more often than the term of your payment schedule.

Final Words about Debt

Debt can feel like the heaviest burden in life. It can weigh down your spirits, occupy your mind, and make you feel bound—because you are bound. When debt takes on a life of its own and grows faster than you can pay it, its weight displaces everything—including the money you’re saving for your future and your capacity to invest. In this booklet, I hope I’ve managed to strip dept of its mystique, because ultimately, no matter the size or variety, debt is always manageable. So get in touch and stay in touch with your money. True financial freedom is not only having money, but having power over that money as well.


About the Author

Suze Orman has been called “a force in the world of per-sonal finance” and a “one-woman financial advice power-house” by USA Today. A two-time Emmy Award–winning television host, New York Times mega-best-selling author, magazine and online columnist, writer/producer, and one of the top motivational speakers in the world today, Orman is undeniably America’s most recognized expert on personal finance.

Orman for 16 years was the contributing editor to O, The Oprah Magazine and for 13 years hosted the award-winning The Suze Orman Show, which aired every Saturday night on CNBC. Over her television career, Suze has accomplished what no other television personality ever has before. Not only is she the single most successful fund-raiser in the history of public television, but she has also garnered an unprecedented eight Gracie awards, more than anyone in the 41-year history of this prestigious award. The Gracies recognize the nation’s best radio, television, and cable programming for, by, and about women.

In 2010, Orman was also honored with the Touchstone Award from Women in Cable Telecommunications, was named one of “The World’s 100 Most Powerful Women” by Forbes, and was presented with an Honorary Doctor of Com-mercial Science degree from Bentley University. In that same month, Orman received the Gracie Allen Tribute Award from the American Women in Radio and Television (AWRT), which is bestowed upon an individual who truly plays a key role in laying the foundation for future generations of women in the media.

In October 2009, Orman was the recipient of a Visionary Award from the Council for Economic Education for being a champion on economic empowerment. In July 2009, Forbes named Orman 18th on their list of “The Most Influential Women In Media.” In May 2009, Orman was presented with an honorary Doctor of Humane Letters degree from the Uni-versity of Illinois. In May 2009 and May 2008, Time magazine named Orman as one of Time’s “100 Most Influential People in the World.” In October 2008, Orman was the recipient of the National Equality Award from the Human Rights Campaign.

In April 2008, Orman was presented with the Amelia Earhart Award for her message of financial empowerment for women. Saturday Night Live spoofed Orman six times during 2008–2011. In 2007, Businessweek named Orman one of the top 10 motivational speakers in the world—she was the ONLY woman on that list, thereby making her 2007’s top female motivational speaker in the world.

Orman, who grew up on the South Side of Chicago, earned a bachelor’s degree in social work at the University of Illinois, and at the age of 30 was still a waitress making $400 a month.