Equifax Eyes Are Watching You–Big Data Means Big Brother
As one of three credit bureaus in the United States, Equifax keeps financial data on every adult in America, plus people in 16 other countries. But the company knows much more than just what goes into an old-fashioned credit score.
It maintains information about people who share the same phone number or address, “non-obvious” relationships between individuals, loans for dental work, magazine subscriptions, rental history, real estate assets, investment wealth, retail purchasing, the type of federal tax return someone files, marital status, employment, utility payments, cable TV accounts, criminal records, debt-to-income ratios, changes of address, motor vehicle files, post office boxes, inferences about someone’s capacity to pay bills, predictions about someone’s propensity to pay, links to past and potential fraud crimes–and more.
This pile of more than 800 billion records is sliced, diced, analyzed and indexed into 26 petabytes of data. That’s more data than the FBI’s Investigative Data Warehouse, said to be the single biggest repository at the agency, with its relatively measly 1 billion unique documents. In all, Equifax has data on 500 million consumers and 81 million businesses worldwide.
Says Equifax CIO Dave Webb: “We know more about you than you would care for us to know.”
In his wry British way, Webb alludes to the power of information and his push to derive ever more lucrative products and services from Equifax’s vast stores of it. Webb says Equifax can make money off IT innovation–that is, his staff’s ability to manipulate massive amounts of data better and faster than competitors can.
The company has launched scores of new IT-based products in the past few years, chasing two ideas: cutting risk and improving marketing for its 46,000 business customers. Equifax can, among other things, check an immigrant’s employment status, verify a doctor’s credentials, assess an Internet user’s social influence and monitor a child’s budding credit portfolio. Big data. Big Brother. Big bucks.
But like other companies in various industries hoping to spin in-house data into revenue, Equifax has to maneuver through tricky economic, political and cultural changes. The recession forces businesses to seek out reliable data on which to base decisions (opportunity), but they have less money to spend (problem). Congress enacted tough regulations to try to control mortgage companies (opportunity), while President Obama’s new Consumer Financial Protection Bureau says it’s going to monitor credit bureaus (problem). People are freer with personal data than ever before (opportunity), but they don’t like it when companies get too personal (problem).
Rivals Experian and TransUnion also are remaking themselves into analytics companies. “Decision analytics is the growth engine for these companies,” says Elizabeth Mason, an analyst at Outsell, a company that studies the information industry. “Yet it’s a shifting landscape. We don’t know yet what the public’s tolerance is for companies mining all of this data really well.”
Privacy? What Privacy?
Business isn’t just about building a better mousetrap. It’s about finding out why people don’t like mice and what they’re willing to do about it. In the past, companies might have gathered consumers in a room to quiz them. Now they pay millions of dollars to collect, buy and analyze data about those consumers, to market the best mousetraps to the right customers.
And why not? People give up personal information in return for convenience. They hand over data about their Web activity for the chance to win a cruise. They let online game companies vacuum up personal tidbits from their Facebook accounts.
Equifax itself coaxes consumers to give up personal information online. A contest to win World Series tickets and $3,000 asked Facebook users to submit a photo and short essay on what they would do with the money.
Consumers share knowingly and unknowingly, through surveys, location-based services, searches, online resumes, photos, check boxes, check-ins, tweets and clicks. People have no time to read gobbledygook privacy policies; they simply click “I Agree.”
“The majority of consumers have no clue about the breadth of the information about them, where their information is residing and who has access to it,” says John Ulzheimer, president of consumer education at SmartCredit.com, which offers consumers credit scores, identity protection and credit-monitoring services.
How the norms have shifted. Until the mid-1990s, the conventional wisdom about privacy protection was, in essence, that information collected for one purpose shouldn’t be used for another. The idea is rooted in a 1973 federal guideline, “Code of Fair Information Practices,” which advocated consumer control and consent as core principles.
After the Web opened up, we moved away from the notion of separating and guarding individual pieces of data to protect privacy. Now the prevailing goal seems to be to collect and combine nearly as much personal information as possible in the quest for profit.
There’s a growing movement against that trend, though, that CIOs should monitor. What people don’t like is when companies combine personal data to reveal more than any single piece of information can, says Lee Rainie, director of the Pew Research Center’s Internet and American Life Project. “They are nervous, concerned that material might hurt them,” he says.
Still, he notes, people fail to lock down their data out of ignorance or neglect, or sometimes because it’s simply not possible.
To protect consumers from themselves and from overreaching companies, lawmakers are getting involved. In March, the Federal Trade Commission recommended that businesses make privacy protection their “default setting.” Companies are asked to issue clearer explanations about what happens to consumer data and simplify the choices people are given for how their information is used. “Implementing these best practices will enhance trust and stimulate commerce,” the FTC says. Congress, meanwhile, is writing “Do Not Track” and other privacy bills.
For now, as data-based products grow more profitable, the boundaries consist of regulations, laws and the judgment of companies policing themselves.
– K. Nash, CIOFrom: cio. com
This is part 2 in a series of videos on basics of credit, that is Credit 101. What is a credit score? How do we explain the algorithm that makes up a credit score or FICO score? This is something that should be taught in high school. A brief explanation of credit scores. Interview between Adam Villaneda and Cesar Marrufo. Elite Financial, LLC credit repair in Yucaipa, California (Moreno Valley). Learn how to fix your bad credit report and position yourself to purchase a home.
4 EASY STEPS TO FIX YOUR OWN CREDIT
Credit has the ability to make some consumers cringe. The whole industry and online forums are filled with previous truths that are now a myth and it can seem daunting to try it on your own. But if you take the process and break it up, it’s actually pretty simple. Here is a breakdown of what we do behind the curtain and how you can help yourself become a better credit expert.
1) ANALYZE – First things first…How can you know where you are going if you don’t know where you currently are? Obtain a credit report through the 3 major credit bureaus (Experian, Trans Union and Equifax). Analyze your credit report for key derogatory items and look for erroneous, disputable and/or obsolete credit information.
2) DISPUTE – This is the fun part (for me), the part where you get to be heard. Voice your frustration out in a calm and assertive manner (Kinda like dog training right?) Dispute key derogatory items for erroneous, disputable and/or obsolete credit information at each credit bureau. This should be done in a letter form and snail mailed to each bureau. NEVER dispute online!
3) ADD (or Maintain) CREDIT – Now, this step is where a lot of consumers get lost. The common question here is “How am I supposed to get credit if my credit stinks!” I have written about this topic several times (HINT= See our website). Almost all credit files with high credit scores have something in common…Open, active credit accounts. This step is CRUCIAL in the process. Focus on obtaining new credit or managing the credit you have open in a proactive way. (HINT= I have written articles on managing credit as well)
4) DIRECT CONTACT – In order to streamline the process, you can also go straight to the source. Contact the original creditor who is reporting the key derogatory information. The same process that is happening through the credit bureaus can happen at each creditor level as well. This step should only be done when a simple credit bureau dispute.
Now, there is a ‘hidden’ 5th step. That is, repeat step 1-2 as needed until you get the desired result. If you are unable to reach your desired result, step 4 will help. In all cases it is extremely important to remember to keep detailed notes and dates, names and numbers for future reference. If you find that you simply don’t have the time, are frustrated with the process or you know someone who needs help with this, simply call our office (909) 570-9048.
p.s. For a copy of “5 SECRETS THE CREDIT BUREAUS DON’T WANT YOU TO KNOW” contact me directly.
Recently, we have received information from our clients about a data breach in the County of San Bernardino, State of California. Here are 4 steps to take if you feel you identity information has been breached…Direct from the FTC Website
Identity Crisis… What to Do If Your Identity is Stolen
“I don’t remember opening that credit card account. And I certainly didn’t buy those items I’m being billed for.”
Maybe you never opened that account, but someone else did…someone who used your name and personal information to commit fraud. When an imposter co-opts your name, your Social Security number (SSN), your credit card number, or some other piece of your personal information for their use – in short, when someone appropriates your personal information without your knowledge – it’s a crime.
The biggest problem? You may not know your identity’s been stolen until you notice that something’s amiss: you may get bills for a credit card account you never opened; your credit report may include debts you never knew you had; a billing cycle may pass without your receiving a statement; or you may see charges on your bills that you didn’t sign for, didn’t authorize, and don’t know anything about.
First Things First
If you’re a victim of identity theft, the Federal Trade Commission (FTC), the nation’s consumer protection agency, recommends that you take the following four steps as soon as possible, and keep records of your conversations and copies of all correspondence.
1. Place a fraud alert on your credit reports, and review your reports.
Fraud alerts can help prevent an identity thief from opening any more accounts in your name. Contact the toll-free fraud number of any of the three nationwide consumer reporting companies to place a fraud alert on your credit report. You need to contact only one of the three companies to place an alert. The company you call is required to contact the other two, which will then place an alert on their versions of your report.
- TransUnion: 1-800-680-7289; www.transunion.com; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
- Equifax: 1-800-525-6285; www.equifax.com; P.O. Box 740241, Atlanta, GA 30374- 0241
- Experian: 1-888-EXPERIAN (397-3742); www.experian.com; P.O. Box 9554, Allen, TX 75013
Once you place the fraud alert on your file, you’re entitled to order free copies of your credit reports; if you ask, only the last four digits of your SSN will appear on your credit reports. Once you get your credit reports, review them carefully. Look for inquiries from companies you haven’t contacted; accounts you didn’t open; and debts on your accounts that you can’t explain. Check that information like your SSN, address(es), and name or initials are correct. If you find fraudulent or inaccurate information, get it removed. See the FTC’s comprehensive identity theft recovery guide, Take Charge: Fighting Back Against Identity Theft, at www.ftc.gov/idtheft to learn how. Continue to check your credit reports periodically, especially for the first year after you discover the identity theft, to make sure no new fraudulent activity has occurred.
There are two types of fraud alerts: an initial alert and an extended alert.
n An initial alert stays on your credit report for at least 90 days. You may ask that an initial fraud alert be placed on your credit report if you suspect you have been, or are about to be, a victim of identity theft.
- An initial alert is appropriate if your wallet has been stolen or if you’ve been taken in by a “phishing” scam. Phishing occurs when scam artists steal personal information from you by sending email that claims to be from a legitimate company and says you have a problem with your account. When you place an initial fraud alert on your credit report, you’re entitled to one free credit report from each of the three nationwide consumer reporting companies.
- An extended alert stays on your credit report for seven years. You can have an extended alert placed on your credit report if you’ve been a victim of identity theft and you provide the consumer reporting company with an “identity theft report.” When you place an extended alert on your credit report, you’re entitled to two free credit reports within twelve months, after placing the alert, from each of the three nationwide consumer reporting companies. In addition, the consumer reporting companies will remove your name from marketing lists for prescreened credit offers for five years unless you ask them to put your name back on the list before then.
To place either of these alerts on your credit report, or to have them removed, you will be required to provide appropriate proof of your identity, which may include your SSN, name, address, and other personal information the consumer reporting company requests.
When a business sees the alert on your credit report, they must verify your identity before issuing you credit. As part of this verification process, the business may try to contact you directly. This may cause some delays if you’re trying to obtain credit. To compensate for possible delays, you may wish to include a cell phone number, where you can be reached easily, in your alert. Remember to keep all contact information in your alert current.
The Identity Theft Report
An identity theft report may have two parts:
Part One is a copy of a report filed with a local, state, or federal law enforcement agency like your local police department, your State Attorney General, the FBI, the U.S. Secret Service, the FTC, or the U.S. Postal Inspection Service. When you file a report, provide as much information as you can about the crime, including anything you know about the dates of the identity theft, the fraudulent accounts opened, and the alleged identity thief.
Part Two of an identity theft report depends on the policies of the consumer reporting company and the information provider (the business that sent the information to the consumer reporting company). They may ask you to provide information or documentation to verify your identity theft in addition to that included in the law enforcement report. They must make their request within 15 days of receiving your law enforcement report, or, if you already have an extended fraud alert on your credit report, the date you submit your request to the credit reporting company for information blocking. The consumer reporting company and the information provider then have 15 more days to work with you to make sure your identity theft report contains everything they need. They are entitled to take five days to review any information you give them. For example, if you give them information 11 days after they request it, they do not have to make a final decision until 16 days after they asked you for that information. If you give them any information after the 15-day deadline, they can reject your identity theft report as incomplete, and you will have to resubmit it with the correct information.
Most federal and state agencies and some local police departments offer only “automated” reports – a report that does not require a face-to-face meeting with a law enforcement officer. Automated reports may be submitted online, or by telephone or mail. If you have a choice, do not use an automated report. The reason? It’s more difficult for the consumer reporting company or information provider to verify the information. Unless you are asking a consumer reporting company to place an extended fraud alert on your credit report, you probably will have to provide additional information or documentation if you use an automated report.
2. Close the accounts that you know, or believe, have been tampered with or opened fraudulently.
Call and speak with someone in the security or fraud department of each company. Follow up in writing, and include copies (NOT originals) of supporting documents. It’s important to notify credit card companies and banks in writing. Send your letters by certified mail, and request a return receipt so you can document what the company received and when. Keep a file of your correspondence and enclosures.
When you open new accounts, use new Personal Identification Numbers (PINs) and passwords. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SSN or your phone number, or a series of consecutive numbers.
If the identity thief has made charges or debits to your accounts, or to fraudulently opened accounts, ask the company for the forms to dispute those transactions. Also request the transaction records relating to the identity theft, such as the fraudulent credit application.
Once you have resolved your identity theft dispute with the company, ask for a letter stating that the company has closed the disputed accounts and has discharged the fraudulent debts. This letter can help you if errors relating to this account reappear on your credit report or you are contacted again about the fraudulent debt.
3. File a report with your local police or the police in the community where the identity theft took place.
Then, get a copy of the police report or at the very least, the number of the report. It can help you deal with creditors who need proof of the crime. If the police are reluctant to take your report, ask to file a “Miscellaneous Incidents” report, or try another jurisdiction, like your state police. You also can check with your state Attorney General’s office to find out if state law requires the police to take reports for identity theft. Check the Blue Pages of your telephone directory for the phone number or check www.naag.org for a list of state Attorneys General.
4. File a complaint with the Federal Trade Commission.
By sharing your identity theft complaint with the FTC, you will provide important information that can help law enforcement officials across the nation track down identity thieves and stop them. The FTC can refer victims’ complaints to other government agencies and companies for further action, as well as investigate companies for violations of laws the agency enforces.
You can file a complaint online at www.ftc.gov/idtheft, by phone at 1-877-IDTHEFT (438-4338); TTY: 1-866-653- 4261, or by mail: Identity Theft Clearinghouse, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580. Be sure to call the Hotline to update your complaint if you have any additional information or problems.
Next, Take Control
Although identity thieves can wreak havoc on your personal finances, there are some things you can do to take control of the situation. Here’s how to handle some of the most common forms of identity theft.
If an identity thief has stolen your mail for access to new credit cards, bank and credit card statements, pre-approved credit offers, and tax information or falsified change-of-address forms, (s)he has committed a crime. Report it to your local postal inspector.
If you discover that an identity thief has changed the billing address on an existing credit card account, close the account. When you open a new account, ask that a password be used before any inquiries or changes can be made on the account. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SSN or your phone number, or a series of consecutive numbers. Avoid the same information and numbers when you create a Personal Identification Number (PIN).
If you have reason to believe that an identity thief has accessed your bank accounts, checking account, or used your ATM card, close the accounts immediately. When you open new accounts, insist on password-only access. If your checks have been stolen or misused, stop payment. If your ATM card has been lost, stolen, or otherwise compromised, cancel the card and get another with a new PIN.
If an identity thief has established new phone or wireless service in your name and is making unauthorized calls that appear to come from – and are billed to – your cellular phone, or is using your calling card and PIN, contact your service provider immediately to cancel the account and calling card. Get new accounts and new PINs.
If it appears that someone is using your SSN when applying for a job, get in touch with the Social Security Administration to verify the accuracy of your reported earnings and that your name is reported correctly. Call 1-800-772-1213 to check your Social Security Statement.
If you suspect that your name or SSN is being used by an identity thief to get a driver’s license, report it to your Department of Motor Vehicles. Also, if your state uses your SSN as your driver’s license number, ask to substitute another number.
Once resolved, most cases of identity theft stay resolved. But occasionally, some victims have recurring problems. To stay on top of the situation, continue to monitor your credit reports and read your financial account statements promptly and carefully. You may want to review your credit reports once every three months in the first year of the theft, and once a year thereafter. Stay alert for other signs of identity theft, like:
- failing to receive bills or other mail. Follow up with creditors if your bills don’t arrive on time. A missing bill could mean an identity thief has taken over your account and changed your billing address to cover his tracks.
- receiving credit cards that you didn’t apply for.
- being denied credit, or being offered less favorable credit terms, like a high interest rate, for no apparent reason.
- getting calls or letters from debt collectors or businesses about merchandise or services you didn’t buy.
Get Your Credit Report
Order a copy of your credit report from the three nationwide consumer reporting companies every year to check on their accuracy and whether they include only those debts and loans you’ve incurred. This could be very important if you’re considering a major purchase, such as a house or a car.
An amendment to the federal Fair Credit Reporting Act requires each of the major nationwide consumer reporting companies to provide you with a free copy of your credit reports, at your request, once every 12 months.
To order your free annual report from one or all of the nationwide consumer reporting companies, visit www.annualcreditreport.com, call toll-free 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is at the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They provide free annual credit reports only through www.annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
For more information, see Your Access to Free Credit Reports at ftc.gov/credit. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Chart Your Course of Action
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
How long can bad credit remain on your credit reports?
So you’ve made some credit mistakes. With over 35% of the population scoring below 650 on the FICO scoring scale, you’re certainly not alone. But now that you’ve made the mistake, how long are you going to have to live with it?
Each and every negative item has a reportable statute of limitations. That means the credit bureaus can legally report it for some period of time before it must be removed. The general consensus is seven years for the credit reporting of negative items. And, while that’s correct for many negative credit items, it’s not always right and certainly not always that simple.
This one has possibly the most confusing statute of limitations so let’s get it out of the way first. Chapter 7 bankruptcies (liquidation of all statutorily dischargeable debts) can remain on your credit files for ten years from the date filed. Chapter 13 bankruptcies (Wage earner programs where you’re still making payments to the trustee) can remain on file for seven years FROM THE DISCHARGE DATE. This is important because most people believe 13s have to be removed seven years from the filing date, which is incorrect. It normally takes three to five years for a Chapter 13 to discharge. That’s when the 7 years begins. The cap on all bankruptcies is ten years so most 13s remain on file for a full ten years, just like Chapter 7s.
This one has the longest statute of limitations and must be broken down into three categories; released, unpaid, withdrawn.
Released Tax Liens – Released liens can remain on file for seven years from the date released. This included liens that have been settled for less than you really owe.
Unpaid Tax Liens – Sit down. Unpaid tax liens can remain on your credit file indefinitely. That’s the bad news. Now the good news…
Paid and Withdrawn Tax Liens – Paid tax liens normally stay on file for seven years, but the IRS just announced that they will withdraw the lien if paid in full AND the taxpayer requests a withdrawal. The credit bureaus do not report withdrawn tax liens so they will come off your files almost immediately if you get them withdrawn.
Defaulted Government Guaranteed Student Loans
Interestingly, the Fair Credit Reporting Act doesn’t govern the amount of time defaulted student loans can remain on your credit reports. The amount of time is actually governed by the Higher Education Act instead. Defaulted student loans can remain on your credit reports for 7 years from the date they are paid, 7 years from the date they were first reported or 7 years from the date the loan re-defaults. The point you should take away from this…pay your student loans!
The Seven Year Club
The following items can remain on your credit files for seven years.
Delinquent Child Support Obligations
Judgments – Seven years from the filing date whether satisfied or not.
Collections – Seven years from date of default with the ORIGINAL creditor, not seven years from when the collection agency buys or is consigned the debt.
Charge Offs– Seven years from the date of the original terminal delinquency.
Settlements– Seven years from the date of the original terminal delinquency
Repossessions and Foreclosures – Seven years from the date of the original terminal delinquency.
Late Payments– Seven years from the date of occurrence.
You’ll notice that I use the term “terminal delinquency” several times above. The seven year period actually begins 180 days AFTER the original delinquency that leads to a collection, charge off or similarly negative action. So, technically these items remain on your credit file for 7.5 years from the date of the last delinquency that precedes the terminal delinquency.
The Forever Club
If your credit report is being accessed for a loan of $150,000 or more then none of the seven and ten-year rules are binding. That means the credit bureaus COULD maintain this negative stuff permanently but only for credit reports where you’ve applied for a higher dollar loan. They also have an exemption for credit reports sold for employment screening where the job is expected to pay $75,000 or more. Thankfully the credit bureaus choose to use the seven and ten year guidelines regardless. Whew.
You Don’t Have to Do Anything, Unless
Other than the tax lien withdrawal process described above the consumer doesn’t have to do anything in order to have negative credit information removed on or before the expiration of the applicable statute of limitations. The process of removing negative information is autopilot and based on a passive date trigger or “purge from date.”
Now, since it’s based on a trigger date there is room for error in the cases of incorrect credit reporting. If the bank says you defaulted in 2005 and you really defaulted in 2004 then the credit bureaus are going to use the 2005 date. Then it’s up to you to argue with (or sue) the lender and the credit bureaus to get the dates corrected.
If you’ve never heard of this term let’s hope you never do. Re-aging is the illegal process of changing the “purge from date” so the credit reporting extends past the allowable period of time. This is not common but when it’s done, it’s usually a collection agencies or debt buyer who is breaking the rules. It’s a clear violation of the Fair Debt Collection Practices Act and the Fair Credit Reporting Act but the debtor has to know it has happened.
There, now it’s all clear as mud.
by John Ulzheimer for mint.com
This is part 5 in a series of videos on basics of credit, which is Credit 101. How to maintain your credit? How to keep a healthy credit score? This is something that should be taught in high school. A brief explanation of credit. Interview between Adam Villaneda and Cesar Marrufo. Elite Financial, LLC credit repair in Yucaipa, California. Learn how to fix your bad credit report and position yourself to purchase a home. I do NOT own rights to this music and am not claiming that I do.
Disputing Credit Report Information, What Happens to my FICO Scores During The Dispute?
I recently received this question from a consumer regarding a rumor they heard about how disputing credit information impacts their FICO credit scores…
“I’ve read on the Internet that when someone disputes information on their credit reports their credit scores will improve because the disputed item no longer counts in their scores. Is that true”
As you’ve probably figured out by now, there’s a enormous amount of information about credit scores floating around on the Internet. Some of it is accurate, a lot of it is not. This consumer’s question is actually a good one because there is variable treatment of credit information when it’s being disputed. But, it’s not as simple as saying, “no, it doesn’t count in your score while it’s in dispute.” Here’s the truth on the matter…
First off, the credit reporting agencies aren’t stupid. Second, FICO isn’t stupid. They know that ignoring a piece of negative credit information simply because the consumer doesn’t agree with it isn’t a good idea. If that were actually true then consumers would challenge everything they don’t agree with and then go out an apply for a loan while the items are being investigated. Sorry, it doesn’t work that way.
There are two different types of consumer disputes, the initial dispute and the persistent dispute. The initial dispute is the first time a consumer challenges the accuracy of a credit item. Normally the credit bureaus will post narrative text that states the consumer disputes the account and that they are in the process of investigating its accuracy. If the investigation comes back verifying that the credit data is, in fact, correct then that initial dispute text is supposed to be removed. If the consumer still challenges the accuracy of the data the bureaus will often post persistent text with the account stating the consumer disagrees with it. And, of course, the consumer can always add a longer 100 word statement to the credit report explaining their side of the story.
The initial dispute can change how the credit scoring model treats the account, but it’s certainly not fully ignored. Anything negative or debt related is temporarily bypassed while the initial dispute is conducted. This can sometimes cause the score to increase, although you wouldn’t know that, and it might seem like an opportunity for the consumer to pull a fast one on their lender by trying to time an application to coincide with the dispute. But, lenders aren’t stupid either.
When a lender pulls your credit report they can see that you’re disputing something. And since they’re privy to this “while in dispute” strategy many of them have built in policies that will kick out an application submitted by a consumer who has an active dispute in process. Fannie Mae, the mortgage giant, is one of them. Point being, it doesn’t really matter how good your score may be…the fact that you’re disputing potentially negative information isn’t a secret and lenders will want your dispute to be finalized before they move ahead.
Look, nobody blames anyone for trying to get a better FICO score. We all want great scores, right? But, I have a much better “score improvement” idea…earn great scores by paying your bills on time and staying out of credit card debt and you won’t have to try and beat the system. You’ll pay lower interest rates, lower insurance premiums, and be treated much better by your lenders. And, good scores tend to persist because once you’ve gotten a taste of low interest rates you’ll never want to go back to sub-prime land again.
OG Article here – http://www.smartcredit.com/blog/2011/01/05/disputing-credit-report-information-what-happens-to-my-fico-scores-during-the-dispute/
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.
Interesting article I found on NY Times about how collection accounts can ruin credit scores. I see this very often. In many instances, consumers have health insurance and a co-pay was billed and the client was not notified appropriately. The end results was a drop in credit scores, hours wasted on the phone and money spent to just make it go away. It is an unfortunate fact of the credit reporting industry. Read on…
Paying your medical bills is becoming more complicated, particularly as more patients become responsible for a greater share of their medical costs. And often, hospitals and other providers are turning over bills more quickly to collection agencies.
The problem, as my article on Saturday outlines, is that medical bills can be riddled with errors. Or, it may just take you many months and phone calls to figure out how much you’re really obligated to pay, or why your insurer is dragging its feet. But if you take too long to untangle the mess, it could end up hurting your credit score. If a medical provider hires a collection agency to collect the money on its behalf, credit experts said there’s nothing stopping them from reporting the delinquency to the big credit reporting bureaus. Debt collection experts said that it was ultimately up to the medical provider to determine when the debt got reported.
A consumer has 30 days to dispute the debt (from the time the debt collector initially reaches out to them) with the collector. And if the consumer disputes the cost, the collector is supposed to “cease collection of the debt” until the collector can verify the debt with, say, a copy of a judgment. “That would seem to include notice to the credit bureaus,” said Robert J. Hobbs, deputy director at the National Consumer Law Center and author of “Fair Debt Collection” (National Consumer Law Center, 1987). But “it’s a gray area of whether that is actually a collection effort.”
The Consumer Data Industry Association, a trade group for the big credit bureaus, said that consumers could also request to have the debt deleted from their credit report if the debt was invalid. But as we’ve reported before, disputing errors is not always an easy process.
“You’ve got this mishmash of consumer protection laws that might provide some protection, but aren’t specifically designed to protect consumers against medical billing problems,” said Gerri Detweiler, a credit expert with Credit.com. “We’ve given collection agencies a lot of power to harm consumers’ credit reports due to medical problems, without proper checks and balances.”
The article also discusses legislation that would erase medical debt from credit reports within 45 days of being settled or paid. Supporters of the bill said it would help people whose credit scores were unfairly damaged, while critics argued that it would undermine the value of credit reports because it does not distinguish between people who were truly delinquent and those who were the victims of billing errors or other mistakes.
Has your credit score been damaged by medical bills? What do you think of the legislation? Please share your experience in the comment section below.
By TARA SIEGEL BERNARD
OG Article here http://bucks.blogs.nytimes.com/2012/05/04/on-keeping-medical-bills-from-hurting-your-credit-score/?ref=your-money
How Mortgage Lates Affect Your FICO® Scores
There are a few certainties in life: death, taxes, and FICO not disclosing how many “points” certain events can cost your FICO scores. But, less than two weeks ago, the scoring giant did just that: provide some clarity on how many points you can lose by doing a variety of “bad” things with your mortgage loans.
Here’s what we already knew: delinquencies are bad, severe delinquencies are usually worse, and recent and frequent delinquencies are the worst.
As a result of FICO’s study results, we also now know the following:
For someone with a FICO score of 680…
A 30-day delinquency and a 90-day delinquency have the SAME score impact. Both of these events will turn the 680 into a score somewhere between 600-620.
A short sale (settlement), with a deficiency balance, will have the SAME score impact as a foreclosure. The events will turn a 680 into a score somewhere between 575-595.
A bankruptcy is the worst thing that can happen to your FICO scores. It will turn a 680 into a score somewhere between 530-550.
The amount of time for your score to fully recover back to a 680 is 9 months for a 30-day or 90-day delinquency, but it takes much longer to recover from anything worse. Short sales, settlements, and foreclosures all take three years to fully recover. A bankruptcy will take you five years to recover.
For someone with a FICO score of 780…
A 30-day delinquency and a 90-day delinquency have a different score impact. The 30-day late turns the 780 into a score somewhere between 670-690. A 90-day delinquency will turn the 780 into a 650-670.
A short sale (settlement), with a deficiency balance, will again have the SAME score impact as a foreclosure. The events will turn a 780 into a score somewhere between 620-640.
The amount of time for your score to fully recover back to a 780 is much longer than the amount of time for your 680 to recover. It takes three years to recover from a 30-day delinquency and seven years to recover from a 90-day delinquency, a short sale, or a foreclosure. It will take you seven to 10 years to recover from a bankruptcy.
What I found to be especially important is the fact that a payment that’s even just one cycle past due (a 30-day delinquency) has a profound negative impact on your scores. This is especially problematic for consumers who have chosen to be delinquent on their mortgages in an attempt to get help under the Making Home Affordable plans.
“Consumers may be told in some cases that they have to go late before they can get any help under one of the HAMP (Home Affordable Modification Program) programs,” says Joanne Gaskin, Director of FICO’s Global Scoring Unit. “It’s important for them to understand that even a 30-day late can be very damaging.”
This study also seems to finally put to bed the ongoing myth that short sales are better for your credit scores than foreclosures. “There seems to be a perceived view that a short sale is going to be significantly different to your FICO score than a foreclosure”, Gaskin says. “While there’s a minor difference, it’s not significant.”
(The above charts were copied from FICO’s Banking Analytics Blog.)
mint.com/blog/trends/how-mortgage-payments-affect-fico-04112011 findoriginal article here
This is part 4 in a series of videos on basics of credit, which is Credit 101. What are the credit bureaus? Who are the credit bureaus? This is something that should be taught in high school. A brief explanation of credit. Interview between Adam Villaneda and Cesar Marrufo. Elite Financial, LLC credit repair in Yucaipa, California. Learn how to fix your bad credit report and position yourself to purchase a home.