Score a Copy of your Credit Report

As I was chatting with a dear friend the other day, I was made aware of an alarming reality. Some think that checking your credit report will negatively affect your credit. Let me dispel this myth now: checking your own credit report will NOT lower your score!!! Check the Experian website right now! Worse, some people do not know where or how to access their credit reports. Not to mention, the lack of awareness that one is ENTITLED to three FREE credit reports per year under FEDERAL LAW. You should thus be checking your credit three times per year.

Let.Me.Break.It.Down.

There are three credit bureaus: Equifax, Experian and Transunion. For consumers like you and me credit bureaus are in the business of credit and information management. They are charged with maintaining our credit histories, explaining how to dispute discrepancies on our credit reports and helping us understand how to avoid, defend against and recover from fraud.

Check Your Credit Score and Check It Often

Well, you don't have to check it compulsively, but you should at least know what it is and its implications. A credit score is a measure of creditworthiness. Your score will determine whether or not you are a "good" loan candidate (i.e., you're more likely to repay your loan ON TIME and thus are considered a "low-risk" borrower), the amount of credit extended to you (like $200 versus $20,000) and the interest rate you are required to pay on loans/credit issued. Low credit score= poor loan/credit terms (FOR YOU).

The following factors affect your credit score:

• Payment History- Late for bill payments, in collections or bankruptcy? WHAP! Ouch, that hurt!
• Outstanding Debt- If you have 35% or more debt to credit ratio then...POW! IN YOUR FACE! Dammit that really hurts! Under 35% debt to credit? Sounds good to me.
• Credit Account History- Established a record of credit AND been making payments on time? What a fine young gal you are! Keep these accounts open and continue to make payments on time if you have any left, especially before large purchases that require loans. An established credit history in good standing will help your credit. Bad Credit History? THUD! OMG, you dropped an anvil on my foot!
• Recent Inquiries- Applying for new credit too often hurts your credit score because creditors check your credit report creating a "hard inquiry." Hard inquiries hit kinda hard.
• Types of Credit- Just make sure you have a "healthy balance" of credit accounts and loans (for a total of four to six accounts).

Your credit score can vary depending on the source from which you received it because there are thousands of algorithms used to compute a credit score. The range that your credit score falls within should be consistent though. Lenders/Creditors have the final say as to whether you will be extended or denied a loan/credit so ask your potential lender/creditor for their idea of "good."

OFF TO THE RANGES (FICO SCORE 300-850)

Oh Heaven: 800+

The Good: 700-799

The Bad: you fall somewhere below 650

The Ugly: Must I go there?

Note: your credit score can vary by as much as 40 points between the three credit bureaus, so check your credit and be sure to clear any inaccuracies.

If you fall under the "Bad" or "Ugly" categories creditors look at you, THEIR FACES GROW LONG AND HARROWED and THEY internally SCREAM, "You're NOT Worthy!"

Oh boy, that was harsh. You can bounce back!

RESILIENCE

Repeat after me: PAY, REDUCE, REMOVE, CURB!

• PAY your bills on time all of them. If you know you're nearing the end of a billing cycle and you can't pay at least call whomever you owe and set up a payment arrangement.

• REDUCE your debt. If you have credit card debt you canNOT pay the minimum payment and expect to EVER pay off your debt. Start paying quadruple the minimum if you can. If not, negotiate a lower rate with your credit card and gradually consolidate balances. If you feel confident that you can pay your debt off in a year then perhaps look into a balance transfer credit card that offers 0% interest for one year. Transfer manageable balances to that card. Pay the principal, INTEREST FREE.

• REMOVE any inaccuracies on your credit history if they exist.

• CURB your credit happy trigger. STOP applying for credit. That includes credit cards, loans, etc.

You my friend are now on the road to recovery!

SOME CREDIT SCORE DON'T YOU DARES (courtesy of Transunion)

• Close the oldest account on your credit reports. This could cause your credit history to appear shorter and could harm your credit score.
• Throw away old cards and expect your accounts to close automatically. The safest way to close an account is to send a certified letter to the customer service department of the credit company. You should receive an account closing confirmation letter in 10 days.
• You shouldn’t be pressured to cancel several accounts all at once. Gradually paying down and closing accounts may be the best plan if you are unsure about the impact on your credit score or the amount of debt you need to carry. If you want to cancel numerous credit accounts, spacing the closures over time will reduce the chance of attracting negative suspicion from potential creditors.
• Avoid over-consolidating balances onto one card. If your credit balances rise to above 35% of your available limits, you may see a drop in your credit score.
• Don't forget to check your credit reports for updates and errors after you close your credit accounts. Wait thirty to sixty days for the account to be marked as "closed" on your report. The account and your payment history though, will remain on your report for seven or more years.

I SWEAR I DIDN'T DO IT!!!

Found something on your credit report that you think is inaccurate? DISPUTE IT! It's your right to have any inaccuracies investigated. First you should play Watson yourself. Contact the creditor or lender that has made the alleged mistake. You should find their contact information under "Contact Information" at the bottom of your credit report.

Case is proving difficult to solve, eh? Call for back up! Contact one of the credit bureaus (if you choose by mail, use certified mail):

Equifax Online

By Mail:

Equifax
P.O. Box 740241
Atlanta, GA 30374-0241

Experian Online

Transunion Online

By Mail:

TransUnion
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022

The credit bureau(s) will ferret out any inaccuracies, if any exist (sometimes we forget about that missed credit card/loan payment or two). There is no guarantee that a change will be made, but if one is made, you will be notified.

Keep Thieves Away from Your Credit (or as I like to call it, YOUR COOKIE JAR)Courtesy of Equifax

• Be careful about giving out personal information. Whether on the phone, by mail, or on the Internet, never give anyone your card number, Social Security number, or other personal information for a purpose you don't understand. Ask to use other types of identifiers when possible, and don't carry your SS card. Be sure to keep it in a secure place.
• Protect your mail. Tear or shred charge receipts, credit applications, insurance forms, bank statements, expired charge cards, and pre-approved credit offers. Deposit outgoing mail in post office collection boxes or at your local post office. Promptly remove mail from your mailbox after it's delivered. If you plan to go away, call the U.S. Postal Service at 800-275-8777 and request a vacation hold.
• Guard your credit cards. Minimize the information and the number of cards you carry in your wallet. If you lose a card, contact the fraud division of the credit card company. If you apply for a new credit card and it doesn't arrive in a reasonable period, contact the issuer. Watch cashiers when you give them your card for a purchase. Also, when you receive a new card, sign it in permanent ink and activate it immediately.
• Pay attention to billing cycles. Contact creditors immediately if your bills arrive late. A missing bill could mean an identity thief has taken over your credit card account and changed your billing address.
• Safeguard personal information in your home. Especially if you are having service work done in your home, employ outside help, or have a roommate.
• Find out who has access to your information at work. Verify that records are kept in a secure location, and are accessible only to employees who have a legitimate reason to access it.
• Be smart about passwords and PINs. Memorize your passwords and personal identification numbers instead of carrying them with you. 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.

The Thief Got into Your Cookie Jar, but How?!

• Going through your mail or trash, looking for bank and credit card statements, pre-approved credit offers, and tax information.
• Stealing personal information from your wallet or purse such as identification, credit, or bank cards.
• Completing change-of-address forms to redirect your mail.
• Obtaining your credit report by posing as a landlord or someone else who has a lawful right to the information.
• Acquiring personal information you share on unsecured sites on the Internet.
• Buying personal information about you from an inside source -- for example, a store employee that gets your information from a credit application or by "skimming" your credit card information when you make a purchase.
• Getting your personnel records at work.

Now He's Using Your Personal Information to Steal More Cookies!!!

• Opening new credit card accounts using your name, date of birth, and Social Security number. When they use the credit cards and don't pay the bills, the delinquency is reported on your credit report.
• Establishing phone or cellular service in your name.
• Opening a bank account in your name and writing bad checks on the account.
• Counterfeiting checks or debit cards, and draining your bank account.
• Buying cars by taking out auto loans in your name.
• Calling your credit card issuer and, pretending to be you, changing the address on the account. Bills get sent to the new address, so you don't realize there's a problem until you check your credit report.
• Filing for bankruptcy using your name to avoid paying debts they've incurred under your name.

Victim of Fraud? FIGHT BACK! (from Experian and Equifax)

• Place an Initial 90 day Fraud Alert by calling any one of the 3 nationwide credit reporting companies. The agency that accepts your request will share your request with the other two credit reporting companies, which will add the alert to your file or request that you provide them additional information. You will receive a confirmation when an alert is added to your file.
• Inform creditors- Contact each creditor with the fraud account and inform them that the account is fraudulent.
• Document all contacts- Make notes of everyone you speak with; ask for names, department names, phone extensions and record the date you speak with them.
• Understand the process- Each creditor may have a different process for handling a fraud claim. Make sure you understand exactly what is expected from you, and then ask what you can expect from the creditor. At the conclusion of an investigation, ask the creditor for a document that states you are not responsible for the debt.
• Follow up- Make sure everything a creditor/credit reporting agency has requested is received. It is always a good idea to place a follow up call or send a letter for confirmation.
• Review reports regularly- Obtain another report several months after you believe everything is cleared up. If a new fraudulent account is discovered, you know how to handle it. If your credit report is back to normal, you can feel confident that all issues were resolved as you expected. It would be a good idea to check your credit report again in six months and a year later.
• Don't throw away files- Keep all notes and correspondence in an accessible file in case they are needed in the future.
• Place a Security Freeze on your credit file. You have the right to place a security freeze on your credit file under state law. To determine the availability of a security freeze for your state and to determine the fees for placing and temporarily lifting a security freeze, please click here. A security freeze will limit the three credit reporting agencies from reporting your credit file to third parties, such as credit grantors and other companies and agencies, except those exempted by law or those for whom you contacted us and requested that we temporarily lift the security freeze.

MORAL OF THE DAY: Check your credit report and check it AT LEAST three times per year. It's the best and easiest way to detect fraud.