According to a study done by the FTC (Federal Trade Commission) your credit reports has errors. These findings were announced today by the NCLC (National consumer Law Centers) and U.S. PIRG (US Public Interest Research Group) and confirm their own findings based on a previous study.
The study was released on a 60 minute expose on the Credit Reporting Agencies. The study found the following facts:
21% of Consumers have Verified Errors
13% had Errors that Effect there Credit Report
5% had errors that were serious enough to cause denied credit or pay a higher interest rate
Ed Mierzwinski US PIRG Consumer Program Director said that these finding were no surprise. Ed also stated “We’ve criticized the credit reporting industry for decades over unacceptable levels of seriously damaging mistakes, many of which are entirely preventable.”
Mierzwinski noted that the FTC study found that the percentage of serious errors was about 10 times the percentage reported by a May 2011 industry-funded study, which had claimed that only 0.51% of credit reports had errors serious enough to cause the consumer to be denied or pay more for credit.
These findings were said to be “pretty troubling information” and that the error rates were “pretty high.” according to FTC Chairman Jon Leibowitz.
Well apparently not much has changed in the last decade. Here is a C-SPAN video that was released in 2002 that outlines similar issues in a consumer groups report titled “Consumers and Credit Reports.”
Mr. Mierzwinski concluded that “Consumers need to be protected in the entire financial marketplace, at banks and non-banks, including credit bureaus, who have acted as reckless gatekeepers to financial and employment opportunity for too long.”
Howard Shelanski, Director of the FTC’s Bureau of Economics stated that “These are eye-opening numbers for American consumers,” “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
So what can you do to prevent these errors? Unfortunately there is no preventable measure to prevent errors from happening. Your best defense against the credit reporting agencies is taking a proactive approach by reviewing your credit report on quarterly bases for errors.
To review your credit reports go to AnnualCreditReport.com. This website was set up by the 3 credit reporting agencies in order to be in compliance with FACTA allowing consumers access to 3 free credit reports per year.
Tens of millions of Americans live their normal, everyday lives totally oblivious to their credit score, and the positive or negative consequences it can have on their financial future. According to the credit bureau Experian, over one third of Americans had a credit score under 600 in 2016 which is the number that indicates bad credit. Bad credit can be caused by poor financial decisions, unexpected expenses/emergencies or more likely, the lack of knowledge of the complicated process of managing a credit score. Millions of people have never even checked their credit reports even though it affects their daily financial life.
Although managing your credit can be a challenging process to handle yourself the consequences of ignoring it can be devastating financially. Poor credit can keep you from buying the new car you need, the dream home you’ve always wanted, or even the loan you need to take out to put your child through college.
Now even if you are lucky enough to be approved for your loan, car, or home with bad credit your credit score will still affect the interest rates that you will be forced to pay back. This difference is only a mere percentage point or two, but when you are dealing with six to seven figure costs, the difference will be in the tens of thousands.
This could be the difference in paying an extra $200 dollars a month on your mortgage for the next 40 years of your life!
Your credit can also have side effects that affect your everyday life as well. Having bad credit carries certain stigmas and stereotypes with you. For example, someone with bad credit will have a tougher time finding work, higher credit card fees, and higher car insurance rates. This is due to companies generalizing those with bad credit; if you mishandle your own money who is to say you won’t be a reckless driver or careless worker.
Unless you are someone who always carries cash on them credit cards will cost you extra, too. Credit card companies will charge those with good credit significantly less on interest rates. Having bad credit could cost paying an extra five percent on everything you put on your card. Credit is even effecting your weekly trip to buy groceries.
Because credit is essential in the process of major life choices like going to college, using a credit card, and buying a car or home, having bad credit will certainly cost you hundreds of thousands of dollars over the course of your life. The gap between living comfortably or constantly in debt can revolve around having good credit or not.
I invite you to clink on the link below to discover the way that FES can get you to financial freedom to enjoy the premiums of life with good a good credit score!
To Your Financial Future,
There’s no denying that we are a society that’s addicted to instant gratification and we suffer from lack of focus. When people talk about credit restoration, it’s often with the pretense that it’s got to happen quick and they want minimal involvement. To RESTORE your credit, you’re going to have to do 2 things, first, lose the instant gratification mindset, and secondly, take a focused, hands-on approach. This will help create short term and long-term results.
Restoring your credit should not be looked at as a FAST or ONE-TIME event.
Now this doesn’t mean that you can’t restore your credit quickly, that will depend on the condition of the credit at the start of the credit restoration process. As well there will be times in the future where you will need to tweak somethings to improve your credit score. Perhaps your preparing for a purchase of a new home or car. So, you must approach your credit from a long-term perspective, your credit and credit score is going to be with you for the rest of your life and is changing all the time.
Your credit score has played a role in everything you’ve done in life till this point and will continue to play a role in your life. Everything from housing, to transportation, getting a job, cell phones, how much you pay for utilities and insurances, not to mention other missed opportunities. It will determine what you can or cannot do today and in the future! It is one of the most important pieces of your financial picture. It must be a made priority.
Think of your credit like would your child. What would happen if you left your child unattended and never checked on them. What if you never feed them? What if you never taught them anything? That probably wouldn’t turn out well. Unfortunately, that’s exactly how a lot of people treat their credit, for years!
Your credit is no different than a child. You must attend it, feed it, learn about it, keep an eye on it! If you do that, you will most likely have GREAT credit and credit score! The good news is, regardless of what your current credit situation is, you can start to change it today!
If you want a GREAT credit score then EDUCATE yourself about how credit works and how to best take care of it for the future use. Your credit score is your child. It needs your attention to be the best it can be. When that happens, the pay-off will be HUGE!
RIGHT 1: The right to view your credit report.
This portion of the law requires that the credit reporting agencies supply you with a full report on your credit transactions at any time you request one. There is no charge for the first credit report you request annually. For every subsequent credit report you request, the credit reporting agencies are allowed to charge a reasonable fee. However, if you have recently been rejected for credit you are entitled to a free credit report even if you have already requested one that year.
RIGHT 2: The right to know who has inquired about your credit.
The law allows you to know every bank, credit card company, employer, etc. who has requested a copy of your credit report. This even includes all the times the credit reporting agency has pulled your file.
RIGHT 3: The right to request verification of information you believe is incorrect.
This allows you to have a negative entry checked. This guarantees that every time you tell a credit reporting agency that an item is incorrect, they will investigate the item. Without this portion of the law, the credit bureaus would be able to refuse to investigate your disputes.
RIGHT 4: The right to insert missing data into your credit file.
Often you will have credit granted to you that never makes its way into your credit report. This portion of the law allows you to report all this good credit information to the credit reporting agencies and have it entered into your credit report.
RIGHT 5: The right to automatically remove information from your credit report that is over seven years old (10 for bankruptcy).
This guarantees that past financial indiscretions do not follow you for the rest of your life.
RIGHT 6: The right to place your personal statement in your credit report.
Some people have negative credit due to extraordinary events such as loss of a job, sickness, divorce, etc. This law allows you to have a written statement of 100 words or fewer placed in your credit report. This can be used to explain to future creditors what caused the bad credit and why it was a one-time occurrence.
RIGHT 7: The right to privacy of the information in your credit report from anyone other than legitimate members of credit reporting agency.
This states that no one can look at your credit report without your permission. That is why creditors have you sign a form allowing them to examine your credit report. The only exception to this right is the credit reporting agencies. They are allowed to look at your credit report without your permission as long as it is for legitimate business purposes.
RIGHT 8: The right to have your credit report transferred from one area to another any time you have a relocation.
This provision of the law guarantees that your credit history follows you wherever you go. This allows your hard-earned good credit to follow you all over the United States. Unfortunately, it also means that any bad credit you have also follows you across the country.
RIGHT 9: The right to use the small claims court system to resolve any disputes with the credit bureaus about incorrect or inaccurate information in your credit report.
This gives you the right to your day in court. If something on your credit report is inaccurate and you can’t get it repaired through the credit repair process, you have the right to present your evidence in a court of law to resolve the dispute.
RIGHT 10: The right to know exactly why you were refused credit.
This means the creditor who refused you credit must inform you exactly why you were turned down. This request must be made by you to the creditor within 10 days of your being turned down.
Written by: Kristy Welsh
Credit repair information and credit repair misinformation is available on the Internet and even more bad advice can be had when listening to friends and family. One person says to do this and then another says to do that, when in actuality, you really have to look at your own situation and determine what credit repair tactics will work for you.
There may be some financial moves you have made, or are going to make, that at first glance may seem harmless but in the long run can really do a number on your credit. You might not realize the significant fall-out to the following seemingly insignificant financial moves until it is too late. This article is meant to set the record straight and try to steer you in the right direction when is comes to repairing your credit. Here we touch on five of the most common mistakes people make when fixing their credit which leads to lowering their credit score.
Keeping a Zero Balance
I know we beat it into your head that you should be paying off your debts, but, paying off a credit card completely every month does not help your credit score - it doesn't hurt it either. When you pay off your card and have a zero balance on this line of credit, it does not factor into your credit utilization ratio. This ratio is the percentage of your credit limit that is being used and factors into 30 percent of your credit score. Here is how to calculate your credit utilization ratio:
Locate your credit balance and credit limit on your last billing statement.
Divide the credit card balance by the credit card limit.
Multiply that number by 100. The lower this number, the better.
Leaving a small balance on your card each month will help to increase your credit score. Oddly, your credit score can actually drop when you bring a card balance down to zero. Go figure!
Keeping a High Balance
Now on the other side of the spectrum, having high balances on your credit cards is not good for your score either. As we mentioned already, the amount you owe on your accounts determines about 30 percent of your credit score. Lenders consider those who use a low percentage of their credit, say around 35 percent or less, to be a low credit risk. And being a low credit risk means getting lower interest rates on your loans.
Spending 80 to 90 percent of your available credit limit will negatively affect your credit score. As we saw in the calculations above, having a high credit card balance will equate to having a higher credit utilization ratio which will lower your credit score. Moral of the story, keep you balances low but not at zero.
Negotiate a Lower Annual Percentage Rate
Negotiating a lower annual percentage rate on your credit card may seem like a smart move for cutting expenses and boosting your savings account, but when you do, ensure that your creditor doesn't reduce your credit limit. If that happens, it could affect your credit utilization ratio and lead to a drop in points.
Closing a Credit Card Account
If you've scrimped and struggled to pay off a card, your initial reaction may be to cut up the plastic and close the account. Resist the urge. Various factors are taken into account when calculating your creditworthiness, and 15 percent of your score is determined by the length of your credit history. By closing an account, especially an older one, you shorten your credit history. The more established accounts you have, the higher your credit score.
Credit card companies also look at how much of your available credit you are using, i.e. your credit utilization rate. As we mentioned before, they like to see 35 percent or less of your credit in use at any one time. Paying off a credit card and leaving it open improves your utilization score, but closing it could do just the opposite.
Applying for New Credit
We are not saying to never apply for new credit, just make sure to do so very gingerly. Every time you apply for a new credit card, car loan, or cell phone plan, someone is going to pull your credit. This credit inquiry constitutes a "hard inquiry" which is likely to ding your credit score.
So, if you are looking for a good interest rate, which means you are rate shopping, make sure every lender you visit is not pulling your credit first. Make your final decision BEFORE having your credit pulled by the lender so that way there will only be one hard inquiry on your credit report.
It may seem like maintaining a good credit score is hopeless, but there are ideals you can strive for to achieve a good credit rating. Naturally, some of the above mentioned transactions are easier to avoid than others. By knowing the threat they pose to your credit, you can better understand when these moves really make sense. To sum it up:
Keeping these five common mistakes in mind while you are repairing your credit, will save you lots of anguish down the road. There is nothing more frustrating than thinking you are doing the right things when in actuality, it is hurting your credit score.
Aaron Crowe - https://bettercreditblog.org
Sometimes it’s the little things in life that can make all the difference.
A small ding to your credit score can drop it just enough from being in the excellent credit score range to the good score range. That can be enough to cause lenders to charge you higher interest rates, costing you money that you might otherwise save without the small nick on your credit score.
Inquiries, or new credit, account for about 10 percent of a FICO credit score. While that isn’t much when compared to payment history accounting for 35 percent of a FICO score, a credit score drop of up to 10 percent for having too many lenders look at your credit score can be enough to cost you real money in the long run.
There are two types of inquiries — hard and soft — and the first will hurt a credit score and the latter won’t. Knowing the difference can help you know when to act so that an inquiry doesn’t hurt your score, or when you don’t have to worry about it.
Hard inquiry defined
An example of a hard hard inquiry is when you apply for a credit card and the issuer “pulls” your credit report from one of the three major credit bureaus.
The hard inquiry may lower your score up to five points, depending on the rest of your credit profile. Going months between credit inquiries can have less of an impact than having a bunch at the same time.
Applying for a mortgage is another hard inquiry. The FICO score allows mortgage rate shopping, so applying with four different mortgage lenders in 45 days is counted as only one hard inquiry.
Hard inquires stay on a credit report for two years, but the FICO score ignores them after 12 months. Whatever your credit score, potential lenders will look at you as risky if you have too many inquiries over a short period. For people with a short credit history, this can be especially troublesome.
What’s a soft inquiry?
Soft inquiries come in many forms, and none should hurt a credit score.
Checking your own credit report is a soft inquiry. It doesn’t lower your credit score, as some people think it does, and in fact is a good thing to do to make sure your score is good and the information on your credit report is accurate. Consumers can check their credit reports for free once a year from each of the three major credit bureaus.
Creditors you already work with may do soft inquiries by checking your credit report to see if you’re still creditworthy. Credit card companies do this monthly.
If you get preapproved credit card offers in the mail, those are soft inquiries that don’t affect your score.
If you’ve given a potential employer permission to view your credit report as part of a background check, it’s also a soft inquiry that doesn’t affect a credit score.
What you can do
If you want to avoid a hard credit inquiry that could cause your credit score to drop, the simple solution is to not apply for new credit. But that isn’t always practical, such as if you want to find a better credit card or want to buy a home or car.
There are some money management steps you can take, however.
Start by not applying for credit cards that you know you won’t qualify for. Knowing where your score is on the credit score range can help you decide if applying for a card with some of the best travel rewards, for example, is worthwhile since many such cards require having excellent credit. Applying for a credit card that you probably won’t be approved for results in a hard inquiry and a rejection, which can also hurt your score.
Some credit card issuers target people with bad credit. If that’s you, be sure to read the fine print and make sure it’s a card you can live with. It may not have all of the features you want, but over time and by paying the bill on time, you can improve your credit score and move up to a better credit card.
These issuers may advertise that they won’t run a hard credit check and will base their decision on other factors, such as your income and employment history.
If you have good or excellent credit, a hard inquiry shouldn’t have much of an impact, if any, on your credit score. Keep your score high by paying your bills on time, don’t use more than 30 percent of the credit available to you, and have a good mix of credit.
When checking your credit score, look for errors and dispute them with the credit bureaus. Your vigilance should pay off with a better credit score and eventually should get you better credit terms. With that, a hard credit inquiry won’t hurt so much, if at all.
Your credit report is a snapshot of your payment history for all credit transactions that you have from age 18 until now. It details when you applied for credit, how many positive and negative accounts you have, who viewed your credit report, and all your personal information. Reviewing your credit report every four to six months gives you a chance to check for identity theft, inaccurate accounts, and incorrect information. It allows you to manage your financial situation before applying for a credit card, auto loan, bank loan, mortgage loan, employment, or insurance. For example, if you check your credit and notice that there are a few negative items on your report, you will have a chance to fix those items before applying for credit. By doing this, you avoid embarrassment and several inquiries, which lowers your credit score.
Mixed credit reports are caused when the credit bureau places information belonging to another consumer on your credit report.
The reason mixed files are so hard to correct is because the lender typically is not sending in incorrect information. The problem is being caused by the credit bureau inadvertently commingling data belonging to two consumers and placing it on one credit report.
Credit reporting agencies are under no obligation to proactively investigate the information on your credit reports to determine if it’s yours or if it belongs to another person with the same name.
It's you’re responsible for pulling your own credit reports, reviewing the information and then filing a formal dispute with the credit bureaus if you find data that you believe is incorrect or belongs to someone else.
Additional reasons for incorrect data in credit files include:
>You have a common name
>The person applied for credit under different versions of their name (Robert Jones, Bob Jones, etc.)
>Clerical error in reading or entering name or address information from a hand-written application
>The person gave an inaccurate Social Security number, or the number was misread by the lender
>Sr.'s and Jr.'s living within the same household get account information crossed
>Loan or credit card payments were inadvertently applied to the wrong account
Did you know that March is National Credit Education Month? As a business owner, your business and personal credit scores may affect various aspects of your business.
Aside from the fact that you should avoid racking up debt, if you ever want to apply for alternative financing, the lender will likely need to know your credit score. Understandably, many business owners get stressed out when it comes to maintaining or improving their credit scores.
1. Understand the difference between your business and personal credit score – Many people don’t realize that business and personal credit scores are not the same. To start, business credit scores are generated by companies like Dun and Bradstreet and Equifax. In most cases, you’ll need to pay to get a copy of your business credit report, while your personal credit report can be accessed for free through various websites. Another difference is that the scale for business and personal credit scores are different – while personal scores can range from 300 to 850, business credit scores usually range from 0 to 100.
2. Check your score frequently – Even if you think your credit scores are sufficient, things change. There could be an error on your personal or business credit report in the future, or your score could fluctuate depending on whether or not you make payments on-time, among other factors. Make it a consistent initiative to monitor your scores, so that you are never in the dark!
3. See how you measure up – While every business is different, it is important to know how your credit scores fare in terms of other businesses. If your score is below the national average, then it is imperative that you work to raise it. For instance, according to Value Penguin, the national average personal credit score in the U. S. is 695. By knowing the average scores, you can set goals for your business to meet.
4. Focus on meeting payment deadlines – If you’re serious about boosting your personal credit score, a good place to start is to ensure that you’re paying your bills early or on-time. If paying bills late is one of your bad habits, set up payment reminders through your banking portals, so that you’re notified before a payment is due. By making payments on-time moving forward, you’ll likely see your personal credit score increase. Same goes for your business credit score – pay outstanding balances on your business accounts on-time, too!
5. Reduce debt – It’s easier said than done, but paying off an outstanding balance can be a great way to improve your credit score. Even if it is reducing it by small amounts, it is important to make an effort to pay off debt. Once eliminated, make it a priority to stay debt-free. Your future self, and your credit scores, will thank you!
CREDIT EDUCATION MONTH: DEALING WITH A BAD CREDIT REPORT
Think of your credit report as a reflection of your financial character that impacts almost all the major & minor financial decisions you make. Therefore, reviewing your credit report may confirm your fears if you have made some credit mistakes in the past. As part of Credit Education Month, here are some steps that you can take to make the situation better and repair your credit report.
Steps to Repair Your Credit Report for Credit Education Month
Correct any Errors on Your Report
It’s common to find that there is incorrect information in your credit report. You have the legal right to dispute and correct this information, and you should. You can send a written dispute to each credit reporting agency that has reported inaccurate information. By law, they must investigate the entry, correct any mistakes, and respond to you within 30 days. Afterward, you should obtain another copy of your credit report to confirm the corrections. Then, you should also send the results of the investigation to the other credit reporting agencies.
Written by Elizabeth Aldrich
If you mess up financially, or even make a tiny mistake, you can usually bet it will lower your credit score. However, if you’re doing everything you should and being financially responsible, that doesn’t always mean your credit score will increase.
It’s unfair, but building credit usually requires some knowledge of how credit scores are calculated and active and intentional financial decisions based on that knowledge. For example, being so responsible with your money that you don’t need a credit card won’t help your credit at all, but taking out a credit card you don’t need, using it for regular purchases, and paying it off each month will.
This is especially true for renters. Missing a rent payment, getting sent to collections, or getting evicted will almost certainly affect your credit. However, paying your rent on time likely won’t. That’s because your rent payments aren’t automatically reported to the major credit bureaus.
What is rent reporting?
Rent reporting is when your rental manager or a third party service reports your rent payments to credit bureaus for you. This third party service can be a rent reporting service that charges a monthly fee, or it can be a portal through which you pay your rent that offers rent reporting and may or may not charge a fee. Examples include Rent Reporters and Credit my Rent.
If you have rent reporting, it means that the credit bureaus being reported to are tracking your on-time payments and taking them into consideration when they calculate your credit score. So, as long as you never pay late, rent reporting will increase your credit score.
Why you should sign up for rent reporting
Rent reporting is a great, easy way to build your credit score by simply paying your rent on time. While there are loans and credit cards specifically designed to help you build credit, it doesn’t hurt to add on-time rental payments into the mix as well.
This is a great option for people who don’t plan on buying a home anytime soon. It allows their rent payments to still have a positive impact on their credit profile. It’s also a way to build a little credit for people who don’t have any, although taking out a credit building loan or secured credit card will still be necessary to build a substantial amount of credit.
Another benefit of rent reporting is having an official record of your on-time rent payments. If you ever plan to rent again, this can be very beneficial. Landlords almost always want to see a good rental history, and relying on references from old landlords isn’t always the most credible way to vouch for a new renter. This is especially true if you have no or low credit and are having trouble finding a place that will rent to you — showing them a record of on-time rental payments will help convince them.
The drawbacks of rent reporting
There are no real drawbacks to rent reporting in terms of your credit score. Of course, if you miss a payment, it will impact your credit negatively. But late payments can be reported to the credit bureaus even if you aren’t registered for rent reporting.
The only real drawback to rent reporting is that is often costs money. There is a chance that your landlord is already signed up for rent reporting, so be sure to ask if they are before looking into services on your own.
If your rental management doesn’t already report your rent payments, you’ll have to look into third party services on your own. These often have a setup fee and then a monthly fee associated with them. Setup can range from a few dollars to $100, and monthly fees can range from nothing to around $10.
If you decide that rent reporting is right for you and find a service that you like, it’s worth talking to your landlord and seeing if they’ll include rent reporting in your rent. They may decide to offer it as an added bonus to their future renters.
How to sign up for rent reporting
Again, the first step is to ask your landlord if they’re already signed up for rent reporting. Your on-time rent payments could already be boosting your credit score without you even knowing it.
If you’re not signed up for rent reporting, it’s time to shop around. The most important thing to know is that every rent reporting service reports to different credit bureaus. Some may only report to smaller credit bureaus, while others may report to one of the major credit bureaus, and others still may report to all three major credit bureaus.
The problem with a rent reporting service that only reports to certain credit bureaus is that they may not be reporting to credit bureaus that your future lenders use. You have many different credit scores, and when you apply for a credit card, mortgage, or loan, the bank will typically look at one of those scores from one of those bureaus – whichever bureau they typically pull from. If your rent reporting service is reporting to credit bureau A, but all your future lenders pull your credit report from credit bureaus B and C, then the rent reporting service you paid for was essentially useless.
The three major credit bureaus are Experian, Equifax, and TransUnion. Ideally, you’ll want to find a rent reporting service that reports to all three. You should calculate the total annual cost, include setup and monthly fees, and find the most inexpensive option that reports to major credit bureaus. Be sure to ask the service what happens in the case of a dispute with your landlord.
Other perks to look for are things like free access to credit scores and recommendations for specific lenders and credit cards that pull credit reports from the credit bureaus that your service reports to.