HELPING YOUR TEENAGER BUILD CREDIT:
Will making my 16-year-old daughter an authorized user on my credit card build her credit history? – V. Parikh
Yes. Using such a “credit card with training wheels,” says credit expert John Ulzheimer, is the best and most common way for a young person to build credit. The big three reporting agencies will start a file on her — either right away or when she turns 17 (policies vary). FICO, the leading credit score provider, will calculate hers once the agencies make her data available. (Equifax will do so at age 16, TransUnion at 17, and Experian at 18.)
If you pay your bill on time and keep your balance in check, she’ll build a history that will help her later. When she’s 21 (or 18, with proof of independent financial means), she can apply for a credit card on her own.
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.
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.
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.
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
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
Here is something you need to know about opting out of those credit card offers ; aka Junkmail
10 reasons you can’t get credit
When an application is turned down, you should know why. Here are some of the common reasons, and what you should do next.
If you’ve never been rejected for credit, count yourself fortunate. Somewhere between 25% and 35% of credit card applications are typically approved, “depending upon the pricing value proposition and other factors,” according to Robert Hammer, the president of R.K. Hammer and Associates, a consultant to the card industry.
With some issuers, the approval rate may be a mere 10% or so.
If you’re not turned down for credit, you may be told instead that you didn’t qualify for the best rate. Either way, if a credit score (or credit-based insurance score) was used in the decision, you must be told the main factors that contributed to your score.
Deciphering those reasons can be maddening, though. “What do you mean, I have no recent revolving balances?” Or, “So it says my account balances are too high. What does ‘too high’ mean anyway?”
Here’s a guide to some of the main reasons you may be turned down — and what you can do about them.
Keep in mind that these are just some of the factors that may be used to evaluate your credit. Not all of them will apply in all situations, and there may be variations on these as well.
‘Proportion of balances to credit limits is too high on bank revolving or other revolving accounts’
What it means: The score likely looks at your total available credit limits and compares them with your outstanding balances, individually and in the aggregate. The greater the percentage of your available credit that you are using, the greater the impact on your scores.
What you can do about it: Focus on paying down balances that are close to the credit limits as quickly as possible. What about transferring a balance from a maxed-out card to one with a smaller balance? While that might help, it’s not likely, since you still have just as much debt as before (another factor).
‘Amount owed on accounts is too high’
What it means: This factor may look at your debt in comparison with that of other consumers, and if your debt is higher than optimal, it could show up as a reason why you weren’t approved.
What you can do about it: This one is particularly frustrating because you probably have no idea how much debt is too much, nor do you know which balances to try to pay down first. Typically, though, you’ll get the most bang for your buck, credit-wise, by focusing first on paying down your credit cards with balances that are closest to the limits.
‘Too many recent inquiries in the past 12 months’
What it means: This reason appears when your credit report indicates a high number of credit applications (inquiries) within the past year. But not all are counted the same. Checking your own credit reports doesn’t count; nor do promotional inquiries, inquiries from employer and insurance companies, and account reviews by your current creditors. The impact of inquiries on your credit will vary, depending on your overall credit profile, but the typical inquiry can be expected to affect your score by about five points.
What you can do about it: This reason is more likely to appear when you have a limited credit history or strong credit, simply because there are fewer other significant negative factors affecting your scores. But it doesn’t hurt to lay low for a while. Avoid opening new retail cards. While inquiries resulting from shopping for a mortgage, student loan or auto loan aren’t as likely to hurt your score as the same number of inquiries for credit cards, limit your applications to a short period of time, such as 14 days.
‘Level of delinquency on accounts’
What it means: Delinquency refers to payments that were late. The general rule of thumb is that the further you fall behind, the greater the impact on your credit scores.
What you can do about it: If the information is inaccurate, you can dispute it. If it’s correct, you’re going to have to live with it for a while; usually up to seven years. Focus on making your current payments on time. If cash is tight, remember that all you have to do is make the minimum payment on time to avoid a delinquency on your report.
‘Time since delinquency is too recent or unknown’
What it means: Recent late payments will have a greater impact on your score than older late payments. Typically, delinquencies within a year or two will hurt your scores the most. If an account was delinquent a while ago but the credit report doesn’t indicate the date, this factor can pop up as well.
What you can do about it: The good news is that as time passes, these delinquencies will carry less weight, especially when you are paying current bills on time. But the date is important here. If an inaccurate date (or no date) is reported for a charge-off or collection account, for example, make sure you dispute that with the credit-reporting agency.|
‘Serious delinquency, derogatory public record or collection filed’
What it means: This can mean that your credit report includes a bankruptcy, judgment, tax lien or collection account. Bankruptcy remains on your report 10 years from the date you file (seven years for a completed Chapter 13). Paid judgments can be reported for seven years, but unpaid judgments can stay even longer. Paid tax liens are removed seven years after being paid, but unpaid tax liens can remain on your report indefinitely. Collection accounts may be reported for seven years and 180 days from the date you first fell behind with the original creditor, leading up to the account being turned over to collections.
What you can do about it: If the information is accurate, this is also a matter of biding your time and making sure you have as many positive credit references currently reporting as possible. (A secured card may be an option if you can’t qualify for a regular credit card.) And while paying a collection, judgment or tax lien won’t likely change this factor in the short run, it could result in the public-record item being removed from your report sooner and protect you from being sued for a debt, which could result in additional judgments or collections on your credit reports. If dates are incorrectly reported or payments are not being reported — not uncommon with collection accounts — dispute them.
‘No recent revolving balances (or no recent bank card balances)’
What it means: This reason may appear when your credit report doesn’t include any revolving accounts (usually credit cards), or when all your credit cards closed or are no longer being reported. If you have open credit cards, it may also appear when there are no balances on those accounts.
What you can do about it: Don’t worry. This doesn’t mean you have to have debt to have good credit. As long as you use your cards from time to time, this shouldn’t be a problem. But if you are avoiding credit cards altogether, you’ll have a tough time getting a top credit score. Get a credit card and use it occasionally — even a secured card — pay it in full and on time, and you should be fine.
‘Lack of recent installment loan information’
What it means: Your mortgage was paid off years ago. You pay cash for your cars. You don’t have any outstanding student loans. Guess what? The fact that you’re ultra-responsible here doesn’t help your credit scores.
What you can do about it: The strongest credit scores go to those with a mix of different types of accounts. Does that mean you have to rush out and take out a loan? No. But next time you go to buy a car, you may want to find out if you qualify for 0% financing or a low-rate loan. Or you may want to see if you can get a low-rate personal loan to consolidate some higher-rate credit card debt. On the other hand, don’t go overboard. You don’t want to pay a lot in extra interest charges.
‘Too few accounts currently paid as agreed’
What it means: This reason appears when your credit report does not show enough accounts paid on time relative to the number of accounts with late payments. But if you haven’t been late with payments, this reason most likely means that you need more accounts reported on your file as “paid as agreed.”
What you can do about it: You may want to think about adding a current credit reference, or even a couple of them over time. If you’re having trouble getting approved for a credit card or personal loan, consider a secured card.
‘Too many consumer finance company accounts’
What it means: Consumer finance companies make relatively small personal loans, usually limited to a several thousand dollars, and quite often at interest rates higher than those on most credit cards. Consumers who rely heavily on consumer finance company accounts tend to be riskier to lenders than consumers without such accounts.
What you can do about it: Paying off these types of accounts will not improve your credit immediately, but it’s still a good idea to pay them off as soon as you can, since the interest rates are probably high. Next time you need to borrow, try first to get a standard personal loan through a social-lending website, for example, or from your bank or credit union.
By Gerri Detweiler, Credit.com
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.
Think you have three credit scores? You may have 50 or more
You probably know you have a credit score, and that score dictates much of your financial future. You might know you have three credit scores, thanks to aggressive advertising from companies that sell access to them.
However, those hardly scratch the surface of the collection of credit scores lenders might use to judge you. There are, most likely, dozens of scores that might control your ability to get a mortgage, buy a car or obtain insurance.
Banks often use their own scores, tweaked versions of the FICO score that began the credit score craze. Auto lenders also have their own scores. So do car insurers. And old scores, based on old formulas, are still in use by many lenders. U.S. consumers may have 50 different credit scores — or more — that could impact their ability to borrow money, and that number is rising, experts say.
“The idea of there being a one true credit score, well that’s just not accurate,” said Michael Schreiber, editor in chief at Credit.Com, a consumer advice website.
John Ulzheimer, a credit score expert who formerly worked for FICO score inventor Fair Isaac Corp., produced a detailed infographic for CreditSesame.com in September which detailed 49 different scores based on the FICO. He has found another five or six since them. And that number doesn’t include competitors like Vantage Score, invented by the credit bureaus in an attempt to cut out Fair Isaac, or other proprietary kinds of credit scores.
Getting your actual credit score is a like game of roulette at this point,” said Ulzheimer, now president of consumer education at SmartCredit.com. “Getting the wrong number can be overwhelming to a consumer. The lender is using one score but you don’t know which score.”
There are also exotic credit-based scores, such as a “revenue score,” which predicts how much interest revenue a credit card holder will generate; a bankruptcy score indicating the likelihood someone will file for legal relief of debts; and a collection score that helps debt collectors prioritize their efforts.
Credit scores were once held completely in secret by the credit industry, but are more available to the public today. Credit monitoring services include them with monthly subscriptions. Fair Isaac, the inventor of the credit score, sells FICO scores at MyFico.com. Wells Fargo gives them away to consumers who walk in and ask about new accounts. Credit.com gives away a free score to site visitors. But with more scores being invented all the time, it’s hard to say what consumers are looking at when they receive a credit score.
“It does irk people when they find out there’s a very different number they get from one scoring model to another,” said Gerri Detweiler, scoring expert at Credit.com. “People wonder, ‘What good is it to check my score if the score banks see is different?’”
If any credit score provider implies consumers are getting a comprehensive view of their creditworthiness by ordering three credit scores — based on their three credit reports at Equifax, Trans Union, and Experian — that’s misleading, Detweiler said. It’s also misleading for any firm to suggest their score is the one used by most lenders.
Ulzheimer think so, too.
“If you go to MyFico and you get a score, that is the same brand of score that lenders are using predominantly,” said Ulzheimer. “Going past that is an embellishment. … MyFico does sell you a FICO score, but it may not be the same FICO score that lenders use.”
In fact, many banks have their own scores, which sprinkle their own criteria into the complex algorithm. Car loan issuers, for example, often choose to weigh previous car loan payment history higher than other lenders, Detweiler said.
The proliferation of scores is partly the result of continuous updates to scoring formulas that are expensive for financial institutions to adopt, Ulzheimer said.
“Scores are really nothing more than generations of software,” he said. “Think of how many generations of Microsoft software are out there, for example. Every year, there’s something new that’s a little better but kind of does the same thing. Scoring systems are like that.”
For example: Last week, the group behind the Vantage scoring system announced VantageScore 3.0. It has some consumer-friendly features, such as ignoring collections accounts that have been paid off (such accounts generally lower a consumer’s FICO score), and providing exceptions for consumers who don’t pay bills because of natural disasters like Hurricane Sandy. But firms may continue to use VantageScore 2.0 for a long time.
“A large bank that didn’t want to update its systems could force providers to keep old scoring systems going for years,” Ulzheimer said.
Given the proliferation of scores, should consumers even bother trying to see one of their credit scores? Absolutely, says Detweiler. She says any score will offer a helpful reference point.
“Don’t focus so much on the number as much as what direction you are moving,” she says. “The number will give you some information about what areas of your financial life you need to work on. But if there is a drop, you will know something significant has happened.”
The number itself doesn’t matter as much as how a consumer compares to the general population, she said. Armed with this information, consumers should be able to ensure they are getting a fair interest rate when borrowing money for a home or a car or applying for a credit card. Consumers who rank near the top of a scoring scale should get a bank’s best rate.
Because she thinks consumers should track their score over time, Detweiler says it’s important to stick with the same score than trying to compare a free score doled out by a bank with another score purchased from a website.
Ulzheimer said it’s fruitless and frustrating for consumers to obsessively follow their credit scores as they pop up and down, given that lenders see different scores anyway. He recommends “managing” to your credit report instead of your credit score, since the report is at the heart of all score formulas.
“What’s constant across all scores is that doing the right thing will lead to a better score across the board,” he said. “If you pay your bills on time, your scores will go up. So worry about that. Managing to three credit reports is easier than trying to manage all those credit scores. …Consumers have to let go of that, because the number of scores will continue to get larger, not smaller.”
That’s not to suggest variations among credit scores aren’t important. In September, the Consumer Financial Protection Bureau published a study of credit scores revealing that variations among different scoring models could impact as consumer’s borrowing costs about 20 percent of the time.
The study recommended that firms that sell credit scores “should make consumers aware that the scores consumers purchase could vary, sometimes substantially, from the scores used by creditors.”
The best way to avoid paying too much for credit because of a credit score variation is to shop around. Never take the auto dealer’s word for it that they’ve gotten you the best deal on your car loan. The variations matter less with mortgages, where banks usually get three credit scores and throw out the lowest and higher score.
Detweiler said for personal sanity, consumers should avoid treating credit scores the way they treated SAT scores in high school, or grade point averages in college.
“Don’t get too hung up on a number,” she said. “You know the serenity prayer? There are some things you have control over, and some you don’t. Take care of the things you can control, like paying your bills, and the score will take care of itself.”
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