Yes, You Need to Check Your Credit Report

Checking your credit history and being aware of your rights is one of the most important steps as a borrower. It is recommended that consumers check their credit history minimally one time a year. The three main credit reporting agencies are Equifax, Experian and TransUnion. These credit bureaus are required to provide consumers with one free credit report each year.

Protecting your privacy is the single most important reason why you should check your credit report. Credit reports offer a great deal of sensitive information such as name, addresses; past and present, social security number, birth date and past and present employment information.    As a consumer you have the right to know who has requested your credit report.   Each time you apply for credit the lender may request a copy of your credit report prior to granting you credit.  Your permission is not needed for circumstances in which you are asking for credit.  If you have not given a party permission to access your report it becomes a matter of compromised privacy for you because they have access to your personal information.   Consumer surveys report that there are approximately 10 million victims of identity theft in this country each year.  Don’t be a victim of identity theft. 

You want to know who has checked or attempted to gain access to your credit report.  Privacy and identity theft are major consumer threats.  It is legal for lenders to check your credit report to approve you for borrowing.  It is not legal for other parties such as landlords, employers or insurance companies to gain access to your report without your written consent.  You have the right to know who has attempted to access your credit history.  When you request a copy of your report it should also contain the identity of all parties who have requested your credit report within the last six months. 

You need to ensure the accuracy of your credit report.  An inaccurate report can be the difference between getting approved or denied for credit.  Your credit report includes pertinent information about your personal credit history.  Delinquent payments, liens bankruptcies and outstanding debts are all listed on your credit report. Creditors that have granted you credit make regular reports to the credit reporting agencies that produce the credit report.  A survey conducted by a U.S. Public Interest Research Group (USPIRG) in 2004 found that there were significant errors in one in four consumer credit reports. Checking and correcting your report if necessary is your responsibility. It can be both frustrating and time consuming to correct the report, however unless you push for the errors to be corrected do the report may remain inaccurate and negatively affect your credit score. Ensure that your personal information is correct as well as your debts and borrowing history. 

It is important at to be an informed and aware borrower. What you don’t know about your report can hurt you.  Your report determines your credit worthiness in many circumstances in your life.  Issues or discrepancies with your credit report should be addressed immediately through credit reporting agency responsible for your report. 

How To Spot Identity Theft On Your Credit Report

Identity theft continues to be a growing problem in the United States and throughout the world. Millions of victims report problems resulting from identity theft each year, making it a concern for everyone. Despite the many ways you can prevent becoming a victim of identity theft, there are some situations which are simply unavoidable. Knowing how to spot identity theft and what to do afterward are important steps to limit the financial fallout that results from identity theft. Here we look at how your credit report can help you spot identity theft.

When you are reviewing your credit report, pay close attention to the following areas:

• Address or employment changes- Unless you have recently moved or changed jobs there should not be any changes to your address or employment information. You are looking for changes indicate someone else might be opening accounts in your name, not just a small “typo” where your street name is misspelled.

• Recent inquiries- Inquiries on your credit report should reflect activity that you are aware of and authorized. They should correspond with your applications or requests for credit as well as periodic checks requested by your creditors. If you spot inquiries that you know you did not request or some that are not from your previous creditors or employers, someone might be using your personal information to obtain credit.

• Account activity- Your credit report shows the activity of all accounts, including those that are inactive, open or closed. Pay close attention to activity on older accounts which you may not use. It is not uncommon for an identity thief to take over old accounts that people may have forgotten about, changing the billing address and running up high balances. If you have older accounts that you do not use, it might be a good idea to close them to avoid potential fraudulent charges.

• Public records or negative information- Clearly you know whether or not your bills are past due or if you have been sued, face foreclosure or eviction. All of these things are recorded on your credit report and if you see something that isn’t correct, it’s time to take action and find out what is going on.

Basically you want to review all information to check for accuracy. Do not just assume it is a mistake, when what you are looking at could be an indication that someone else is using your identity to run up balances, leaving you to pick up the pieces. It is important that you contact each creditor if you suspect you have been the victim of identity theft. You should also place a fraud alert on your credit reports to stop the opening of other accounts in your name. Filing a complaint with the Federal Trade Commission and contacting your local police department are additional steps you can take as a victim of identity theft.

Living Debt-Free Can Be Bad For Your Credit Score

Imagine working so hard to pay off all of your debts only to discover that living a debt-free life is bad for your credit score and other aspects of your financial life. As bad as it sounds, it is exactly what happens to many who have done away with credit cards and paid off their loans. Unfortunately, for as hard as people work to get out of debt, the world seems determined to keep people in debt in order to reap financial benefits.

Why Does It Happen?
Credit scores are based on the different factors of your financial life. The score is supposed to be a reflection of how responsible you are for paying back debts in a timely manner and how well you manage your financial obligations. When your credit report has no information to gauge, your score goes down considerably. In theory, a person with lots of debt who still pay on time may have a better score than someone without any debts at all. The credit score formula involves a mix of credit card account activity, mortgage loans, student loans, and other types of extended credit. If you have none of those account types, you have nothing to calculate.

Why Does It Matter?
There are many who feel a credit score is worthless because they are living debt-free and have no plans to apply for a line of credit or a loan in the future. However, that assumption can be a costly one. Nowadays, there are many situations were a credit score will make a big difference in your life such as when applying for a job, renting an apartment, or when you purchase vehicle insurance. These companies will often pull a credit report and base rates or job offerings on your credit score because the score is meant shed light on credit risk factors. For someone who is responsible enough to have no debts, an increase in insurance premiums is boldly unfair.

What To Do About It?
If your credit score is suffering because you are debt free, there are things you can do to help the situation. It may not be the most desirable way for you to fix your finances but when it comes to necessity for insurance purposes, you may not have many other choices. Here are some things to consider for upping your credit score:

Get a Credit Card
You may have closed your credit card accounts long ago but using a credit card for normal, everyday purchases and paying off the balance in full at the end of the billing cycle can signal a jump in your score in a few months time.

Apply for a Loan
It sounds crazy to apply for a loan when you haven’t a need for a loan but it can help you get your credit score back on track. You can visit with your bank or credit union and apply for a small personal loan.  A loan officer may be able to advise which is best for your situation. The money loaned can then be deposited into an account and all monthly payments can be automatically withdrawn each month. This may not be the best solution for everyone but it is an option.

Debt Settlement And Your Credit Report

Your credit report contains information that is used to determine a variety of factors that can have a huge impact on your financial future. Details on your credit report indicate whether or not you pose a credit risk to lenders. Potential employers and landlords can view your report to evaluate credit worthiness and level of responsibility. For this reason it is imperative to avoid negative marks and maintain positive credit history. Unfortunately life is unpredictable and many people find themselves in a position where maintaining good credit becomes impossible. At some point you have to make the tough decision as to whether or not trying to maintain your credit is worth living in debt. If you can no longer pay your bills and are considering debt settlement the first thing you should know is how it will affect your credit.

Debt settlement, a process which involves negotiating with your creditors to reduce the amount of money you owe, can be a lifesaver for those drowning in debt. It does however have several drawbacks, one of which is the negative impact it has on your credit. Since creditors will only negotiate a reduced balance with a person who is no longer making regular payments, you will see negative marks on your report as you fall behind on payments. In an ideal world you would never let this happen, but when you simply can’t stretch your dollars any farther the first thing to go unpaid is the credit card bill. Survival becomes more important than your credit report. If you are successful in negotiating your debt, you can pay off the balances and begin rebuilding your credit while building your financial security.

Settled debt can be reported in a variety of ways. Some creditors will report your debt as settled, or as a paid charge off. This is viewed as a negative to future lenders and may affect your ability to qualify for loans or other credit. If you are approved you will face higher interest rates than your peers who do not have settled debts on their report. You can ask your creditor to report your account as “paid” and in some cases they will comply. This will vastly improve your credit score and expedite the rebuilding of your credit.

When you are considering debt settlement you should think about how this process will impact your credit. This is a debt elimination method that is reserved for people who face a legitimate and severe financial hardship. If you are a candidate you are more than likely already falling behind in payments therefore the process isn’t going to do more damage than you are already experiencing. Conversely if you are able to find any other way to pay your balances on time or in full, you can avoid the negative impact of debt settlement on your credit report.

Credit Repair Scams- Don’t Take The Bait

There are millions of people who have been affected by the recession. As consumers work to get their finances back on track, the prospect of dealing with credit repair can seem a bit overwhelming. There are companies out there that know how frustrating the process can be and offer services to consumers who want help repairing their credit. Unfortunately there is no “easy fix” for damaged credit and companies that promise otherwise are selling lies. Here are a few tips to avoid being the victim of a credit repair scam.

 

• Do not pay for services upfront. It is against the law for credit repair companies to charge a fee before services are rendered.

• Understand your rights- Each person has the right and ability to repair their credit on their own. If you are considering a credit repair company and they have not disclosed this information, they are more than likely up to no good.

• Avoid the “new identity” pitch- Some credit repair companies will encourage clients to create a new credit report or identity by applying for an Employer Identification Number (EIN) that will be used instead of your social security number. Do not fall for this pitch and avoid working with a company that offers this advice.

• Stay involved- Review your credit report and contact the credit reporting company if you have any questions regarding the information contained on your report. Fraudulent credit repair companies often recommend you avoid contact with credit reporting agencies which leaves you in the dark in regards to the activity on your credit report.

• Do not dispute accurate information- Inaccurate information reported on your credit report can and should be disputed in order to have it removed. Avoid companies that suggest you dispute all negative information regardless of the accuracy.

 

Many consumers find the process of repairing their credit long, confusing and disheartening. In truth, it can be a long process but one that each person can and should do on their own. Their are legitimate credit repair companies out there, however they do not do anything that you can not do yourself. This is one situation where you can eliminate the chances of being scammed by an illegitimate company by simply learning how to repair your credit on your own and committing to the process. It may take time, however you will have the satisfaction of knowing the right steps are being taken and the end result will be a credit report and score that reflect your true credit worthiness.

 

 

The Deal With Loan Modification Programs

With the troubles that surfaced in the home mortgage industry, loan modification programs are becoming a popular solution for avoiding home foreclosure. However, to use such a program to your advantage, it is best to understand exactly what the program will do for you.

The Description
A loan modification can be compared to a refinance deal in that it can help you to find a more affordable monthly mortgage payment relevant to your current financial situation. The big difference is that you are not shopping for a new loan as you would with a refinance. Instead, you are looking to modify the terms of your existing mortgage contract.

The Modification Against the Refinance
While the majority of homeowners would be better off electing for a total refinance with a new loan, due to the current struggles of many families with bad credit, a whole new loan may not be an option. Thus the popularity of the loan modification program. Many of those enrolled in the modification program have already missed a payment or two and have subsequently taken a hit on their credit score.

The Eligibility Factors
While all mortgage companies will operate differently, there are some common guidelines that most will go by to determine eligibility. Some of these eligibility factors include homeowners that have had a change of financial circumstances resulting in a financial hardship; homeowners who have missed three payments or more on their monthly mortgage payments; the home involved in the mortgage is the primary residence for the mortgagee; and a bankruptcy can not have been filed. Additionally, it is required that mortgage holders do not default on their mortgages purposely just to get a modification. It is in your best interest that you contact your lender specifically to understand what other eligibility factors are involved.

Starting the Process
Getting a loan modification can be accomplished only by going through the lender that holds your mortgage. Determine who to talk to by looking in the coupon book that you use to pay your mortgage each month. Contact the lender and ask what kind of modification programs they offer. Be cautious as there are some companies that do not have the proper training to conduct a modification loan or question. Keep asking for help until you are clear about what can be done for you.

Remain Cautious
There are unfortunately many companies cropping up that claim they can be a third-party assistant for getting a loan modification. Sadly, most of these companies only take your money and do nothing to help you with your mortgage. If that is the case with someone you work with, you are not only out money, you are also still responsible for your mortgage payment and subsequent fines and penalties for being late.

Cooperation Levels
Many lenders are willing to offer this option because it is in their best interest to get their money back. They prefer to get your modified payment rather than deal with your foreclosure and their loss. Because so many people were getting into financial trouble, the modification option became the only option for many people.

What To Do When You Can’t Even Pay the Minimum

As the economy is still rocky and job loss is still possible, so it may be no surprise to learn that you can not always afford your credit card minimum payments. It is becoming more common of an occurrence as families struggle to keep a roof over their heads and food on the table, leaving not much room for credit card payments.

One of the worst things you can do is miss a monthly credit card payment. In fact, just being late with a payment can have dire consequences on your credit due to the stricter rules of credit cared companies these days. However, there are consumers who will struggle with making on time payments and if you are one of those people, there are some ways you might be able to help yourself out of a bind.

Here are some Do’s and Don’ts to help you work through financial hardships when credit card payments are due:

DO NOT: Ignore The Problem
Face it, this kind of problem will not go away if you stick your head in the sand. You must take action, no matter how you feel about the situation. Face it now or deal with much worse down the road.

DO: Call the Creditor
As soon as your realize you are tight for cash, contact the credit card company immediately and be honest about your situation. Speak with a supervisor who can make decisions and make notes on your
contact call, including name of the supervisor, date and time of the call.

DO NOT: Lie
If you expect to get help, tell the truth. Let the creditor know when you expect to pay your credit card bill. If you have a bad payment history with the credit card company, they may not be willing to work with you at all but its worth the try.

DO: Ask For Help
If your credit card company will not work with you at all, ask around to friends or family who may be able to give you a temporary loan to get by. Don’t simply let the due date pass without trying to find the cash. You might even need to approach your employer about taking an advance on your salary.

DO: Be Willing to Negotiate
If the creditor is willing to work with you by offering an extension, make sure you can let them know when you can afford to pay and how much. If they are demanding something you can not follow through with, don’t accept the offer. Keep trying to negotiate.

DO NOT: Go Back on the Deal
If you have made a deal with a creditor for a payment at a later date, you better be sure you honor that agreement on time. Otherwise, the creditor will not likely work with you in the future and your negative credit activity will be reported to your credit history. You will also incur penalties and fees you likely can not afford to pay.

DO: Work Out a Budget for the Future
The key to success with finances is to learn from your mistakes. Take time to organize and prioritize your bills so that you will never run into this situation again. You may need to find a supplemental source of income to help get you back on track.