8 credit score myths debunked

July 17, 2015 by · Leave a Comment 

8 credit score myths debunked

Misconceptions abound when it comes to the ways credit scores are determined. Here are some of the more egregious falsehoods surrounding the process

Myth No. 1

Every inquiry for credit costs five points

Fact No. 1

There is no fixed set number of points that a credit inquiry will cost. Generally speaking, inquires make a relatively minor contribution to overall scores. (up to 10%)

Myth No. 2

Part of my credit scores is calculated based on where I live.

Fact No. 2

Credit score calculations do not factor in where you live (city or ZIP code, for example). Effectively managing your credit, on the other hand, will result in higher scores — regardless of whether you live in Beverly Hills, Calif., or Zanesville, Ohio.

Myth No. 3

A bankruptcy will haunt my credit scores forever.

Fact No. 3

While most negative information must be removed from your credit report after seven years, the Fair Credit Reporting Act allows bankruptcy to be listed on your credit report for up to 10 years. It’s true a bankruptcy will negatively affect your scores, though the impact on your scores lessens over time as the bankruptcy ages

Myth No. 4

A short sale has less of an impact on a credit score than a foreclosure.

Fact No. 4

The presence of either a foreclosure or short sale information on a credit bureau report is considered negative, as it is predictive of future credit risk. Generally speaking, both will have a similar impact on a credit score. It’s what you had before the default that matters most (Good credit).

Myth No. 5

Making a lot of money results in higher credit scores.

Fact No. 5

Your income does not have a direct impact on credit bureau scores, as your income information is not recorded on your credit report. The scores focus on how you manage your credit, not on how you could manage your credit given your income.

Myth No. 6

Going to a credit counseling agency will hurt my scores

Fact No. 6

Not true. An indication that you are working with a professional credit counselor will not, in and of itself, hurt your credit scores. However, negotiated settlements on balances owed to your creditors may affect your scores if the lenders report them as such.

Myth No. 7

Carrying smaller balances on several credit cards is better than having a large balance on just one card.

Fact No. 7

Not always. A credit score will often consider the number of accounts or credit cards you carry that have a balance, in addition to your overall utilization of available credit. Thus, you may lose points for having a higher number of accounts with balances

Myth No. 8

850 is the perfect credit score.

Fact No. 8

While 850 may be the highest FICO score, it is not a “perfect” score. The “perfect score” is what a lender requires to approve you for the credit and credit terms you are seeking.

By Tom Quinn, for Credit.com

10 Ways to Protect Yourself From ID Theft

July 14, 2015 by · Leave a Comment 


10 things to know about ID theft

You can protect yourself against identity thieves by understanding how they work, then taking the appropriate precautions with your credit card accounts.
Identity theft is often in the news, but there are a lot of misconceptions swirling around about how to best protect yourself.
While some identity thieves focus on getting your credit cards and maxing them out before you even realize they’re missing, an increasing number are using one piece of information about you — often a credit card number — to steal your entire identity.
Though many folks worry about keeping their credit card information secure when shopping online, the top methods that identity thieves use to steal personal data are still low-tech, according to Justin Yurek, the president of ID Watchdog, an identity theft-monitoring firm. “Watch your personal documents, be careful to whom you give out your data over the phone, and be careful of mail theft,” he says.
Indeed, a February 2009 study by Javelin Strategy & Research found that of the 9.9 million identity-theft cases reported in 2008 — resulting in a loss of $48 billion — online theft accounted for only 11% of incidents. Stolen wallets, checkbooks and credit and debit cards made up almost half.
No one is immune to identity theft, but armed with a little knowledge about how identity thieves operate — and a little common sense — you can stay one step ahead of them.
1. Thieves don’t need your credit card number to steal it. Conversely, they don’t need your credit card to steal your identity. Identity thieves are crafty; sometimes all they need is one piece of information about you, and they can easily gain access to the rest. As a result, says Heather Wells, a recovery manager at ID Experts, an identity-protection company, it’s crucial to lock up important documents at home. “Secure birth certificates, Social Security cards, passports — in a safe deposit box or in a safe hidden at home,” she says. “And that includes credit cards when not in use.”
2. The nonfinancial personal information you reveal online is often enough for a thief. Beware of seemingly innocent personal facts that a thief could use to steal your identity. For example, never list your full birthdate on Facebook or any other social-networking website. And don’t list your home address or telephone number on any website you use for personal or business reasons, including job-search sites.
3. Be careful with your snail mail. “Follow your billing cycles closely,” says Lucy Duni, a vice president of consumer education at TrueCredit. “If a credit card or other bill hasn’t arrived, it may mean that an identity thief has gotten hold of your account and changed your billing address.” Al Marcella, a professor at Webster University’s School of Business and Technology in St. Louis and an expert on identity theft, suggests that when you order new checks, pick them up at the bank instead of shipping them to your home. “Stolen checks can be altered and cashed by fraudsters,” says Duni. And never place outgoing mail in your mailbox or door slot for a carrier to pick up. Anyone can grab it and get your credit card numbers and other financial information. Bring it to the post office yourself.
4. Review bank and credit card statements monthly — and preferably more often. Watch for charges for less than a dollar or two from unfamiliar companies or individuals. Thieves who are planning to purchase a block of stolen credit card numbers often first test to check that the accounts haven’t been canceled by aware customers. They do so by sending a small charge through, sometimes for only a few pennies. If the first charge succeeds, they’ll buy the stolen data and make a much larger charge or purchase. They’re guessing — often correctly — that most cardholders won’t notice such a tiny charge. In addition, many of the fraud alerts you can set on your accounts aren’t triggered by small dollar amounts. Reviewing your credit report on a regular basis is also a good idea, but usually by the time a fraudulent transaction reaches your credit report, it’s too late.
5. If an ATM or store terminal looks funny, don’t use it. “Make sure there is no device attached to any ATM card slot you use,” says Wells. “As a general rule, the mouth of a card receptacle on an ATM machine should be flush with the machine or have only a very slight lip.” If it looks or feels different when you swipe your card, or has an extra piece of plastic sticking out from the card slot, it may be a skimmer, an electronic device placed there by thieves that captures your credit card information when you swipe it. If you notice it after you’ve already inserted your card, you should alert your bank so it can watch for any fraudulent charges to your account.
6. Identity thieves love travelers and tourists. Scott Stevenson, the founder and CEO of Eliminate ID Theft, an ID theft protection company, said that when traveling, you should be alert to strangers hovering when you use a credit card at an ATM or phone, and to avoid public wireless Internet connections unless you have beefed-up security protection.
7. Identity thieves are sneaky; you need to be sneaky, too. There are a few simple things you can do to protect your credit card in case it falls into the wrong hands. “Sign your credit card with a Sharpie so your signature can’t be erased and written over,” suggests Echo Montgomery Garrett, a writer in Marietta, Ga. Consultant Sarah Browne of Carmel, Calif., had all but one credit card stolen from a hotel room. The card that was spared still had the “please activate” sticker on it. Though Browne had activated the card, she forgot to remove the sticker. “The thieves must have known that you have to activate a new card from the phone number listed with the credit card company, so they didn’t bother with it,” she said. Since then, she leaves the activation stickers on all of her cards. Indeed, when a thief struck a second time at a public function, Browne’s stickered cards were again left untouched.
8. Pay attention at the checkout line. If a cashier or salesperson takes your card and either turns away from you or takes too long to conduct what is usually a normal transaction, she may be scanning your card into a handheld skimming terminal to harvest the information. Thieves don’t need a handheld scanner to capture your information. According to Mark Cravens, the “Anti-Scam Doctor” and author of “The Ten Commandments of Investing,” they can take a picture of the front and back of your card with a cellphone or merely swap out cards. “Look at your card when they hand it back and make sure it’s yours, and not another gold, silver, or blue card that looks like yours,” he says. “You may not notice they swapped your card for days.”
9. Go paperless in as many ways as possible. Sandy Shore, a training manager with Novadebt, a nonprofit, New Jersey-based credit-counseling agency, suggests clients cut back on the mail they receive from banks and financial institutions by discontinuing paper bills and statements. “Access your financial statements at the issuer’s website instead,” she says. This strategy has the added bonus of an environmental benefit. Similarly, Vaclav Vincalek, the president of Pacific Coast Information Systems, an IT security firm, recommends that whatever paper receipts and financial statements you do receive go through the shredder instead of into the wastebasket. “Never throw away a credit card slip,” he says. “Instead, shred anything that has any number, name, address on it.”
10. Identity theft insurance can pay off, but you need to read the fine print. Several companies offer identity theft insurance, which covers the money you shell out to repair your identity. This includes whatever you spend on phone calls, making copies of documents and mailing them, hiring an attorney and, in some cases, lost wages. However, the insurance — which costs about $50 a year — does not reimburse you for funds you lost. Your current homeowners policy may include identity theft insurance in your package, so check first before signing up with an outside company. Also, some companies are starting to offer identity theft insurance as an employee benefit.
This article was reported by Lisa Rogak for CreditCards.com

Credit 101 Part 3 Your Credit Profile

July 13, 2015 by · Leave a Comment 

 

This is part 3 in a series of videos on the basics of credit, that is Credit 101. What is your credit profile? How do we explain what makes up your scores? 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 Many Credit Cards Should You Have?

June 15, 2015 by · Leave a Comment 

How Many Credit Cards Should You Have?

I’m asked this question on a weekly basis and have been for years. The infatuation with the optimal number of credit cards makes me smile because I know a secret that not many other people know. That secret is this… there is no right number of credit cards to have.
The basis for the question is purely credit score driven. Consumers rightly care and want to earn and maintain solid credit scores. One of the ways to do so is to become familiar with the things that matter, and by how much. The assumption is that you should have an exact number of credit cards, which would help your scores.
Haters Keep Hating
The hater crowd will undoubtedly suggest that 0 credit cards is the optimal number and that debt is evil… blah blah.
And while I respect the right to have your own opinion on the topic of consumer credit, I’ll be the first to point out when it’s wrong. Having credit cards is an easy and inexpensive way to establish, build, maintain, or rebuild credit. In fact, the vast majority of you started your consumer credit lifecycle by opening some form of plastic.
I’ll give you the same answer I gave for 7 years while I was at FICO and have given for the 7+ years I’ve been gone. As it pertains to your FICO score, the number of credit cards you have isn’t remotely as important as how you’re managing them. And while you can have too many inquiries or too many accounts with balances, it’s hard to have too many credit cards.
Same Numbers, Different Impact
Having only one credit card that also happens to be maxed out is incredibly damaging to your credit score. Having only one credit card that also has a very low balance relative to the credit limit is very helpful to your credit score.
Having fourteen credit cards, like me, that are all paid on time and have $0 balances is very helpful to your credit scores. The last time I checked my FICO scores, my lowest was an 801. Having fourteen credit cards that all have balances is very damaging to your credit scores. Same numbers, different impact.
As For a Hard Number…..
If you really want me to give you a number of cards to have, fine… how about five?
If you can end up with five general use credit cards (those issued with a Visa, MasterCard, Discover, or American Express logo) that each have $20,000 credit limits, then you’ll be in great shape.
First off, you’ll have $100,000 of capacity or buying power (that’s probably enough for most of us). Next, you’ll have a large aggregate credit limit, which means you can charge as much as $10,000 in any one month and still not be over 10% “utilized.” That’s what I call “utilization insurance” because it’s unlikely you’ll cause any serious credit score damage simply because you had one month of expensive charges.
Finally, and this might be my favorite reason, you’ll have a diverse enough set of cards that you won’t run into any situation, in the United States anyway, where you’ll hear “we don’t take that kind of card.”
If five sounds like too many, then have fewer. If you’re responsible with your plastic and you want more, then have more. If you don’t want to have any credit cards, then don’t have any credit cards.
Opinions about how many credit cards to have are just that, opinions. None of them are fully correct and none of them are fully incorrect.
By John Ulzheimer
For mintdotcom /blog/credit/how-many-credit-cards-should-you-have-052012/

Why credit scores are different

May 23, 2015 by · Leave a Comment 

 

 

 

 

 

 

 

 

Many consumers go beyond getting their free annual credit report from the nationwide credit reporting agencies, Equifax, Experian and TransUnion. These consumers pay for monthly subscriptions to a credit monitoring service with the goal of knowing their credit score at any point in time and receiving alerts when someone uses their personal information or accesses their credit history. It takes many people by surprise when they purchase credit scores just before applying for credit only to find the lender’s credit score disclosure does not match. Why is that the case, and what can you do?

What Credit Scores Tell Consumers and Lenders
Credit monitoring services and nationwide credit reporting agencies make money by selling credit scores to consumers, lenders and other businesses that use credit scores for decision-making. You, as a buyer, borrower or consumer, can buy educational credit scores from a credit monitoring service. Educational credit scores help you prepare to apply for loans, manage your debts and eliminate fraud or identity theft. Mortgage lenders, auto loan companies, credit card providers, insurance companies, landlords and employers buy credit scores from credit reporting agencies. Credit scores help them determine if you will pay your bill on time, in full, every month; predict if and when you might fall delinquent on your accounts; or evaluate if and when you are likely to default on your credit obligations. Whatever they’re being used for, credit scores should be based on the same information for both lender and customer, so why are scores from different sources so different? Two reasons credit scores differ are discrepancies in reporting methods and different scoring models.

Issues with Reporting Methods
Common discrepancies in reporting methods include:

  • Consistency – not all data furnishers give information to all credit reporting agencies.
  • Timing – data furnishers may provide the same information to all agencies but at different time schedules.
  • Accuracy – changing personal information, i.e. names or addresses, has to be matched to the correct credit file.
  • Privacy – Credit reporting agencies do not cross-share details on inquiries and information with each other.

Lenders and other creditors can choose what information to report, when to report it and which agencies to report to. Some lenders report monthly to all three agencies. Other creditors, like collection agencies, may report quarterly or only when there is activity on your account. Some agencies only report to a single credit reporting agency. A one-week difference in reporting information to the agencies could make a difference in your score from each one. Since reporting agencies do not cross share information with each other, the report and score you buy may not contain the same information that the lender report and score contains.

Scoring Models
Each credit reporting or monitoring agency uses a different method to calculate your score. They base these calculations on complex mathematics, statistical or algorithmic models. Scoring models are proprietary systems and are protected by trademarks, patents and copyrights.

There are three types of credit scores that credit providers purchase:

  • Generic scores – predict general payment performance
  • Industry scores – predict performance on specific type of credit
  • Custom scores – predict performance by company’s customer base

Generic credit scores are used by credit monitoring services to educate you, the consumer. You can use a credit monitoring service to learn how to get your score from what it is today to where you need it to be in the future. You can also use this service find out how late payments, opening new accounts or paying off debts may change your scores over time. Again, these are educational items and there is no guarantee you will achieve a certain score at any time.
Industry credit scores tell, for example, car lenders how you have paid your car loan, but that score may be different from a mortgage or credit card score. If you have had an automobile repossession, your auto industry score may be low in comparison to your mortgage industry score if you have never had mortgage delinquencies. Lenders may have their own in-house system to calculate a custom score based on their specific credit products and customer base. These scores often rank you in comparison to other customers and may work more like a grading curve than a general purpose credit score.

Take an Active Role in Providing Your Own Credit Information
You cannot control what credit scores you or a lender will get at any time, but you can know what information is in your credit file and keep it up to date. Make sure your name, address, birth date, Social Security number and employment information are current and correct. If you have a common name make sure other people’s information is not in your credit report. If you have received collection agency notices, check for reporting with the original creditor. Duplicate items can affect your credit score. When you correct or dispute an item, make sure you do it with all three bureaus, Equifax, Experian and TransUnion.

The Bottom Line
Finally, educate yourself about the different types of credit scores, credit reporting agencies and credit monitoring services in the market. Visit their websites to learn about their scores and services. Here is a list of providers most often used by consumers and industry.

CreditXpert Score Affinion www.privacyguard.com www.identitysecure.com
Experian PLUS Score Experian www.experian.com www.freecreditscore.com www.freecreditreport.com www.familysecure.com
Equifax Credit Score Equifax www.equifax.com
FICO Score EquifaxFICO www.equifax.com www.myfico.com
VantageScore TransUnionVertrue www.transunion.com www.truecredit.com www.privacymatters.com
www.freescore.com
www.creditdiagnosis.com
www.creditadapter.com

Read more @:sfgatedotcom

 

 

Denied credit? Maybe you’re dead

April 3, 2015 by · Leave a Comment 

Denied credit? Maybe you’re dead

Lots of people ‘die’ every year, at least on paper, and untangling the mistake can be a big headache. Here’s what to do if you learn you’ve ‘died.’

Rejected for a loan because your credit history was shut down? It might be because the credit bureaus think you’re dead.

About 1,000 people per month get mistakenly declared dead by the Social Security Administration, according to government estimates. Many more get falsely reported as deceased by their bank or credit card issuer, or by one of the big three credit bureaus — Experian, Equifax and TransUnion.

Often, when victims find out that they have been mistakenly declared dead, they assume that proving they’re alive and well will be easy. Instead, they find they will have to wait a month or more before lenders will acknowledge their living, breathing, bill-paying status.

Or, in more extreme cases, they’re told that they must be mistaken. They can’t possibly be alive right now because investigators have looked into their case — and records show they’ve passed away.

“There’s a sense of powerlessness, a sense that you are disenfranchised,” says James Willis, a California journalist and professor who was mistakenly declared dead by Capital One two years ago. Willis had started a new job and was getting ready to buy a house when he learned that, according to credit-reporting agency Experian, he had recently died.

“The news of my demise came in the form of a credit alert from Experian,” Willis recalls. “It said a potentially negative item had just been posted to my credit report.”Are debt protection policies worth it? FEATURED

When Willis followed up, he learned that one of his lenders, Capital One, had written off his charges as uncollectible because they believed that he was dead. Experian then froze his report, shutting out the mortgage company that Willis had enlisted to help him buy his house.

“When a credit card company declares you dead, then they send that notice on to the credit-reporting agencies, and then your credit history gets locked down,” explains Willis. “You cannot access it. Nobody can access it, because of the fact they assume you’re dead.”

At that point, being mistakenly declared dead shifts from minor annoyance to potential big, costly problem, says Jim Francis, a consumer lawyer in Philadelphia who has represented clients who have been declared dead on paper.

“The real problem with being marked as deceased on a credit account is you can’t get a credit score,” says Francis. “It’s impossible to get credit to the extent that most banks, mortgages (and) car dealerships require a credit score to assess risk. They have no possibility of getting that, and so there’s no way of getting credit.

“That’s the real problem and the real harm,” he adds.

Getting resurrected takes time

The amount of time it takes for “dead” consumers to be brought back to life can also hurt, say consumer advocates. Credit bureaus have 30 days under the Fair Credit Reporting Act to investigate a credit dispute and check on whether the information they have on file is correct.

However, that’s a long time to wait if a consumer is in the midst of applying for a time-sensitive loan, such as a mortgage, or is applying for a job and needs an immediate credit check, says Todd Mark, vice president for education at the Consumer Credit Counseling Service of Greater Dallas. “Those are situations where you don’t want to have to wait 30 days or longer for a dispute to be initiated,” says Mark.

In the meantime, customer-service representatives are rarely able to help speed up the process, which can be frustrating for a consumer who’s on a tight deadline, says Willis, the customer mistakenly declared dead by Capital One.

Short on time and anxious to erase Capital One’s mistake, Willis says he spent several hours on the phone, trying to get someone to help him in time to close on his home loan.

However, the workers at Capital One told him there was nothing they could do. Instead, Willis had to wait for the bank’s computers to process an investigation into the mistake and report back to the credit bureaus, he says.

“I don’t think you’re dead,” Willis says one customer-service representative told him over the phone. “I know you’re alive, but our computer is in control and our computer has 30 days to rectify the situation.”

“That’s when it took kind of a leap into the twilight zone for me,” says Willis. “Even though the individuals at Capital One believed I was alive, no one seemed to be able to do anything about the computer.”

Eventually, Capital One figured out that it had mixed up Willis with his deceased father, James Willis Sr., and restored his account. However, by that time, Willis had already spent countless hours trying to resurrect his credit.

“That’s what started weighing on me,” says Willis of the time spent trying to get the mistake corrected. “I was starting a new job at the time, and it was just a lot of time devoted to it — a lot of distraction that was caused by this.

“One of the frustrating things is to try to get them to understand that your time is valuable,” he adds.

It may take months — or years — to resolve

Willis was lucky. He was able to get his dispute resolved in less than a month and closed on his house just in time. However, other consumers have had to wait much longer to get their financial lives back on track.

Francis, the consumer lawyer in Philadelphia, says that many of his clients came to him in desperation after submitting their disputes through the credit-reporting agencies’ automated dispute process and getting nowhere.

“They tried sending detailed disputes, documentation (saying), ‘Here I am. This is my Social Security number. This is obviously not me.’ And surprisingly, in a bizarre fashion, the credit-reporting agency verified them as being deceased,” he says.

That’s when their lives turned upside down. Not only could they not get credit, but they had no idea how long it would take the credit bureaus to figure out the mistake.

If you, too, find that you are having trouble proving to lenders that you’re alive, don’t panic.

Prepare a detailed, notarized dispute for the credit-reporting agencies that includes documentation proving you’re alive, and send it by certified mail, say experts.

Also send a notarized copy of your dispute and copies of supporting evidence to any furnisher or creditor that you believe may be responsible for the mistake. If you believe the Social Security Administration is responsible for the mistake, contact your local Social Security office.

In addition, write down the name and number of every person you talk to over the phone, including what the person promised he would do for you, says Mark. “Create your own paper trail at home, and don’t be afraid to step up who you talk to,” he says.

If nothing works and your credit information is still shut down, seek legal help. Under the Fair Credit Reporting Act, you are entitled to seek legal action when legitimate errors — such as being mistakenly declared dead — aren’t corrected in a reasonable period of time.

Finally, remain calm, says Willis. If you believe you’ve located the source of the error, try calling repeatedly until you get a sympathetic voice on the line, he says. “I found one of those individuals with Capital One, and I found one with Equifax,” says Willis.

Explain your situation and understand that the person is at the low end of the totem pole and may not be able to do much to help you, he adds. “The natural tendency is just to boil up, but it doesn’t help anyone to do that. You just have to try to reason with them. Try to remain calm and reasoned, and try not to appear like a nut.”

Credit-reporting agencies are required by the Fair Credit Reporting Act to thoroughly investigate any item on a credit report that a consumer says is wrong. However, in many cases, Francis says, the original furnisher of the information got the record wrong, not the credit bureau, and the credit-reporting agencies don’t follow up.

“The credit-reporting agencies don’t conduct any type of independent investigation,” says Francis. Instead, they send a consumer’s dispute to the organization that supplied the information and rely on it to look into whether a consumer is really dead. “That’s how things are getting verified,” he says.

If a creditor looks at its records and sees that the consumer is listed in its files as deceased, it might not dig further, says Francis. “They’re not really that interested in conducting investigations,” he says. “It’s not really a profit center for them, so they are doing the bare minimum.” As a result, the creditor sometimes ends up repeating the same inaccurate information to the credit bureaus.

At that point, consumers have few options but to wait and try again.

Banks and other creditors are required by law to thoroughly investigate whether the information they have on file is correct, says Francis. “They have the same duty that the credit-reporting agency has,” he says. “Both the credit-reporting agency and the furnisher must conduct a reasonable investigation.” So consumers have the legal ammunition to fight back against credit-reporting agencies’ and furnishers’ claims that they are dead.

However, they have little power to speed up the process and get their credit reports unlocked when they need them.

“It takes a really persistent effort” to get a dispute resolved, says Nina Heck, the director of the Consumer Credit Counseling Service of Maryland and Delaware. “Sometimes (a dispute) has to be resubmitted and resubmitted.”

Heck has worked with multiple clients who have been mistakenly declared dead, and she says it often occurs because a client’s name was mixed up with someone else’s.

When that happens, proving you are who you say you are can be a challenge, she says. “First, you have to prove that you are you, and then you have to be able to validate that this (other) person is deceased,” says Heck.

Beware of the Death Master File

Consumers who have been accidentally declared dead by the Social Security Administration, rather than a creditor, have it even worse. The Social Security Administration keeps a master list called the Death Master File that lists everyone in the United States who has died. Sometimes, a person will get mixed up with someone else, or a typographical error will cause that person to be listed as deceased.

Once a consumer is listed as dead in the Death Master File, numerous stakeholders are notified, including the credit bureaus and other government agencies. Soon after, that individual’s credit reports are shut down, his or her benefits are cut off, and the person can’t get a new job (that requires a valid Social Security number for a living person).

Getting taken off the Death Master File, meanwhile, can sometimes take years, financially devastating those involved.

“As many news reports have accounted, incorrect death reports have created severe personal and financial hardship for those who are erroneously listed as deceased,” said U.S. Rep. Sam Johnson of Texas in February, announcing a congressional hearing on the Death Master File’s accuracy. “Those affected have experienced termination of benefits, rejected credit, declined mortgages and other devastating consequences, while their personal and private information is publicly exposed.”

10/1/2012

By Kelly Dilworth  for CreditCards.com

Found at money.msn.com/credit-rating/denied-credit-maybe-youre-dead

40 Million Mistakes: Is Your Credit Report Accurate?

March 31, 2015 by · Leave a Comment 

Based on a recent study just completed by the FTC…

Is your credit report accurate?

1 in 5 credit reports has an error

Online credit bureau websites designed to sell premium products

Reports for consumers are different from lenders

Dispute process fails to comply with the Fair credit Reporting Act

40 Million Mistakes from 60 minutes

 

Credit Inquiries – What’s The Big Deal?

March 5, 2015 by · Leave a Comment 

How Credit Inquiries Impact Your FICO Score

It’s no secret that FICO scores and other credit risk scores consider credit inquiries when calculating your credit scores. A credit inquiry, if you are not familiar with it, is a record of who pulled your credit report and on what date.

If you want to bone up on inquiries you can do so here. I wrote that article for Mint a couple of years ago and the content is still accurate today.

When it comes to credit applications, many consumers are worried that by applying for credit they might lower their scores. That is certainly a possibility. Credit inquiries can lower your FICO scores. Notice I used the word “can” and not the word “will.”

The True Impact of an Inquiry

Before you choose to not apply for whatever it is you’re applying for, consider the fact that inquiries have a marginal, at best, impact on your credit scores.

Further, just because an inquiry causes your score to go down it may not cause it to go down enough to change any lender’s mind.  Going from FICO 790 to FICO 786 because of new inquiries is likely going to be an irrelevant change when it comes to your credit application.

You’ll also want to keep in mind that the majority of credit applications result in one new inquiry on one of your three credit reports.

Applying for a new credit card doesn’t mean all three of your credit reports are being accessed. Only one is going to be pulled so the new inquiry will only appear on that particular credit report. That means your FICO scores at the other two credit bureaus are not impacted at all.

The only exception to this rule is a mortgage application where the lender or broker will likely pull all three of your credit reports.

The Grand Scheme

Something else to keep in mind…credit inquiries really aren’t terribly important in the grand scheme of things. Inquiries account for up to 10% of the points in your FICO scores. When it comes to pieces of the FICO score pie, it’s the smallest piece. The age of your credit report is more important than your inquiries.

FICO just released some data quantifying the true impact of inquiries to their scores. 57% of consumers are getting the maximum number of points from the inquiry category, which means inquiries are not lowering their scores at all. Inquiries are one of the top four reasons your FICO scores aren’t higher only 11% of the time.

And finally, only 4% of consumers lose more than 20 points in their FICO score because of inquiries. According to Frederic Huynh, one of FICO’s credit score scientists, “The bottom line is that I would not characterize inquiries as being a very important score factor relative to other predictors.”

Bigger Fish to Fry

If you’re concerned about your FICO scores then there are certainly bigger fish to fry than inquires. Negative information and paying your bills on time makes up a 35% piece of the pie. The various debt related measurements account for 30%. How long you’ve had credit is worth 15%. And, the diversity of account types accounts for 10% of the score points.

Keep in mind that when you pull your own credit report through sites like www.annualcreditreport.com, the inquiry has no impact on your scores. And, if you subscribe to a credit monitoring service or choose to purchase your credit reports through any of the retail websites, those inquiries also do not impact your scores.

By John Ulzheimer for Mint.Com

 

mint.com/blog/credit/how-credit-inquiries-impact-your-fico-score-052012

How to Read a Credit Report

March 4, 2015 by · Leave a Comment 

Read a Report

Once you’ve obtained a copy of your credit report, you’ll be able to see what your creditors are saying about you. There’s just one problem — credit reports can be a little confusing. Never fear! Elite Financial, LLC is here to help. In the following paragraphs you’ll find a step-by-step explanation of how to read and interpret each section of your credit report.

I.D. Section

Here you’ll find identifying information like your:

  • name
  • current address
  • social security number
  • date of birth
  • spouse’s name (if applicable)

Easy, right? But don’t just skim over this section. Read all the entries to make sure everything is correct. One bad piece of information and the credit history listed on your report could be wrong.

Credit History Section

This is the meat of the report. It contains a list of your open and paid credit accounts and indicates any late payments reported by your creditors. Although it may seem a little tedious, it’s essential that you read through this section very thoroughly. If you find any information that is incorrect or accounts that don’t belong to you, you’ll need to submit a dispute letter to the credit-reporting agency.

The basic format for the credit history section is as follows:

  • Company Name – identifies the company that is reporting the information.
  • Account Number – lists your account number with the company.
  • Whose Account- Indicates who is responsible for the account and the type of participation you have with the account. Abbreviations may vary depending on the reporting agency but here are some of the most common:
    • I – Individual
    • U – Undesignated
    • J – Joint
    • A – Authorized User
    • M – Maker
    • T – Terminated
    • C – Co-maker/Co-signer
    • S – Shared

 

  • Date Opened – This is the month and year you opened the account with the credit grantor.
  • Months Reviewed – Lists the number of months the account history has been reported.
  • Last Activity – Indicates the date of the last activity on the account. This may be the date of your last payment or last charge.
  • High Credit – Represents the highest amount charged or the credit limit. If the account is an installment loan, the original loan amount will be listed.
  • Terms – For installment loans, the number of installments may be listed or the amount of the monthly payments. For revolving accounts, this column is often left blank.
  • Balance – Indicates the amount owed on the account at the time it was reported.
  • Past Due – This column lists any amount past due at the time the information was reported.
  • Status- A combination of letters and numbers are used to indicate the type of account of the timeliness of payment.Abbreviations for the type of account are as follows:
    • O – Open
    • R – Revolving
    • I – Installment
    • Abbreviations for Timeliness of Payment varies among agencies. Numbers are used to represent how current you are in your payments. Current or paid as agreed is usually represented by 0 or 1. Larger numbers (up to 9) indicate that an account is past due.
  • Date Reported – Indicates the last time information on this account was updated by your creditor.

Collection Accounts Section

If you’ve had any accounts referred to collection agencies in the last seven years, this is where they will be reported. The name of the collection agency will be listed along with the amount you owe and, in some cases, their contact information. If a collection is listed on your report that doesn’t look familiar to you, contact the credit bureau and submit a dispute letter.

For your own piece of mind, you may also want to contact the collection agency (Or have Elite do it for you) to determine the nature of the account. Here’s why.

  • You may find out that the collection account is NOT yours. Perhaps it belongs to someone whose name or social security number is very similar to yours. If this is the case, ask the collection agency to acknowledge this fact in writing. They should send a copy of the letter to you AND the credit reporting agency so that the mistaken information can be cleared from your report.
  • You may find out that the collection account IS yours. If so, it is in your best interest to determine the accuracy of the amount of the collection account and make arrangements to satisfy your obligation as quickly as possible. Once the collection account has been paid, you should request a letter from the collection agency to this effect. Again, make sure the credit reporting agency gets a copy of the letter so that they can list the account as paid.

 

Courthouse Records Section

This section may also be referred to as Public Records. Here you’ll find a listing of public record items (obtained from local, state and federal courts) that reflect your history of meeting financial obligations. These include:

  • Bankruptcy records
  • Tax liens
  • Judgments
  • Collection accounts
  • Overdue child support (in some states)

Look closely at all the information listed here. If anything is mistaken, contact the credit bureau and submit a dispute letter.

Additional Information

This section consists primarily of former addresses and past employers as reported by your creditors.

Inquiry Section

Contains a list of the businesses that have received your credit report in the last 24 months. If you find the names of businesses that sound unfamiliar, you should find out who they are and why they’re looking at your credit! The credit-reporting agency may be able to help you with contact information. Remember, only companies that have received your written authorization should be able to check your credit history.

Time information is retained

The length of time that information remains in your file varies.

  • Credit and collection accounts will be reported for 7 years from the date of the last activity with the original creditor.
  • If you’ve filed a Chapter 7 or Chapter 11 bankruptcy, this information will be reported for 10 years from the date filed.
  • All other courthouse records will be reported for 7 years from date filed.

As always, contact our office for more information. 909-570-9048

Why Do Insurance Companies Use Credit Reports and Scores?

February 13, 2015 by · 4 Comments 

credit scores

Section 604 of the Fair Credit Reporting Act says that the credit reporting agencies, Equifax (EFX), Experian (EXPN) and TransUnion, may furnish reports to any company that intends to use that information for the purpose of underwriting insurance. So, at the Federal level, the use of credit reports for underwriting insurance is perfectly legal and many of them do so. The real question is, why do they do it?

Insurance companies have the same issues lenders have: understanding the risk of doing business with certain consumers. It’s not necessarily the risk of being paid or not being paid for their services (premiums). It’s more so the risk of providing a policy for someone who is more likely to file claims and thus be a less profitable customer. It’s all about the money.

The primary difference between banking and insurance is that insurance policies are all secured, essentially. If you don’t pay your premiums they’ll cut you off, which could lead to you losing your home (it’s called a non-monetary default) or you getting arrested for driving without insurance. Determining whether or not you’ll pay your premiums is not the primary reason some of them pull your credit reports and credit scores.

The primary reason is to determine if they even want to do business with you and/or under what terms. Despite what many believe, how you manage your credit is very predictive of what kind of insurance customer you’ll be. It’s predictive not only of your likelihood of filing claims but also predictive of how profitable you’ll be. If it weren’t, insurance companies wouldn’t spend the money buying millions of credit reports and scores each year.

They’re Not The Same Credit Scores

Much like the financial services environment, the insurance environment relies heavily on credit scores. This isn’t anything new. However, the type of score they’re using is not the same type of score banks and other financial services companies use. In fact, they’re very different.

The scores used by insurance companies are called Insurance Credit Bureau Scores or Insurance Risk Credit Scores. They are developed by a variety of companies, including FICO and LexisNexis.  LexisNexis develops the LexisNexis Attract Score, which is very commonly used by insurance companies.

Insurance scores consider credit information and/or previous insurance claim information. So, if you filed an auto claim or a homeowner’s claim it can be considered in your insurance score and it can result in a lower score. And if you’re assuming the presence of claims means that you’re a less profitable insurance customer, well, you’d be right. Yes, it’s all about the money.

But They’re The Same Credit Reports

While the scores used by insurance companies are different, the reports they use are the same as the reports used by financial services companies.  The reason: all credit reports originate from the same three places; Equifax, Experian and TransUnion. Point being, there are no secret credit reports that insurance companies use to set your premiums.

Insurance Inquiries Don’t Hurt Your Credit Scores

Enough bad news. When you apply for insurance, the insurance company may or may not access your credit reports and scores. There is no guarantee that they will, in fact, pull your credit reports. But, it’s a safe bet.

If the insurance company does choose to access your credit report and score, there will an inquiry posted to the credit file.  It will clearly be identified as being from your insurance company.  And, more importantly, it will systemically be coded as coming from an insurance company.  This is good news because insurance related inquiries are not counted in your credit scores.

You will be able to see them, but no other entity will be able to see them.  And, credit-scoring systems don’t not consider insurance-related inquiries so they’ll never lower your credit scores.

I’ll end on that high note.

By John Ulzheimer here

http://www.mint.com/blog/how-to/insurance-credit-score-03072011/