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What Determines Your Credit Score

Payment History (35%)

As you can see from the FICO Score pie chart above, the largest factor affecting your credit score is your payment history. This includes your track record for making regular and timely payments on all your credit cards, retail accounts, installment loans, finance company accounts, student loans, mortgages, etc.
Your payment history also includes bankruptcies, judgments, suits, liens, and wages attachments (garnishments) related to accounts on your credit file will severely affect your FICO Scores.

Credit lines that have gone into collection will negatively affect your credit history as well as late payments.

The later you are on making your payments (30 days, 90 days, 120 days, etc.) the more negatively that account will affect your credit score.

Other factors that affect the payment history component of your credit score are the balance you owe on any delinquent or overdue accounts, and time (or recency) since you last made a late payment.

The number of past due items on your credit file will also negatively affect your account.

The number of accounts you have in good standing and/or have "paid as agreed" can positively or negatively affect your credit score (the more "paid as agreed" credit items, the better the affect on your score).

How much You Owe (30%)

The next biggest factor affecting your FICO score is how much you owe on each of your individual accounts (auto loans, student loans, mortgages, credit cards, personal loans, boat loans, motorcycle loans, second mortgages, etc.).
Perhaps the most important aspect of "how much you owe" is in relation to what your loans’ original balances were. As an example, a balance of $150,000 remaining on a loan that was originally $300,000 will help your score much more than a balance of $150,000 remaining on a loan that was originally $160,000.

The same holds true for your outstanding credit card balances in relation to their limits (sometimes called the utilization rate). Owing $1,000 on a credit card with a $10,000 limit is much better for your credit than owing $9,000 on a credit card with a $10,000 limit.

We’ve been told in the past by "insiders" that a credit card utilization rate of between 0% and 15% of the balance seems to be the "sweet spot" as far as getting the best credit scores. I would shoot for the 0% if I were you.

Another element in the "How Much You Owe" component of your credit score is how many of your accounts have outstanding balances. Generally speaking, the more open accounts with balances you have, the more adversely your credit score will be affected.

Length of Credit History (15%)

The third component of your credit score relates to how long you’ve been an active borrower of money.
Factors affecting your score in this component include how long it has been since you first applied for credit. For many people, this was probably their first car or a student loan they took out for college.
Another factor is how long you’ve held specific types of accounts. For instance, you may have a student loan account going back 15 years, but you didn’t get your first credit card until 5 years ago. Had you gotten the credit card 15 years earlier, you may benefit from a slightly higher credit score.

New Credit History (10%)

Another component of your credit score is how much new credit you’ve applied for and/or received in the recent past (previous 6 months or so). While it shouldn’t hurt your credit score "too much" according to Fair Isaac and Co. (the company behind FICO scores), having a lot of different inquiries on your credit report(s) for mortgages, cars, and credit cards, might be recognized as a red flag by a financial institution.
In general, the more time that has passed since any previous credit inquiries, the higher your credit score will be (but not by much).

Types of Credit Used (10%)

The final component affecting your credit score is the different types of credit accounts you have in your credit file.
This is our opinion, but I believe having a more diversified portfolio of credit accounts in your credit report (a mortgage, credit cards, student loans, auto loans, etc.), will result in a higher credit score than if an individual had only auto loans, or credit card loans on his or her account.

Bad Credit Cost Money

Bad credit score costs money, but the public is probably not aware of how much that can add up to over time. In many cases it could be over $1 million, that’s right over seven figures!

If you have bad credit, the additional money you pay for things like mortgages, car loans and insurance, compared with what others with good credit pay, can be six figures over a 30-year period. Now if that money is invested wisely that number could rise to more than $1 million.

Here is how bad credit costs you client in more ways than you imagined: Mortgage: One obvious place that bad credit hurts you is the interest rate you must pay when you purchase a house. The Average price for a home in June 2007 was $316,200.

A 30-year, $300,000 loan for someone with a credit score of between 760 and 850 carried a 6.346% APR. Someone with a credit score of between 500 and 579 would have a 10.152% APR. That would mean that a person with a good score would have a monthly payment of $1,866, while the person with the bad credit score would pay $2,666 – or $800 a month more for the same house. That adds up to 288,000 over the 30 years of the loan.

Auto loan:

Edmunds.com says that the average car loan is $24,864. Just think, an auto loan for a person with good credit (defined as a score of between 720 and 850) would carry a 7.221% APR, while someone with bad credit (a score between 500 and 589) would have to pay a 14.909% APR That works out to a difference of $88 a month, which comes to $3,168 over the three years of the loan. The average person keeps their car for 4.5 years.

That means if each person financed a new car every five years, it would cost the person with bad credit $19,008 more in car financing over 30 years than someone with good credit.

Credit cards:

Let’s assume, for our example, that both the people with good and bad credit both carry the median credit card debt of $2,200 over 30 years. If the person with good credit had an interest rate of 9% and the person with bad credit had an interest rate of 20%, the person with bad credit will pay an extra $7, 260 over a 30-year period.

Lost interest:

lf the person with good credit took the difference and invested that money in an account that earned 8% compounded a annually for 30 years, he or she would have well over $1 million saved. In fact, investing the $800 difference in the cost of the mortgage alone would be worth $1.2 million.

Insurance:

All types of insurance (auto, health, homeowners) will likely cost more for a person with bad credit than one with good credit. Insurance companies know that people with bad credit make more claims than those with good credit – and therefore are more of a risk to insure.

If your credit score is taken into account on any of your insurance rates, an individual with bad credit will pay more than a comparable individual with good credit.

Job:

You may lose out on a better job due to bad credit. More and more employers pull your credit report when you apply for a job, because many see a risk in employing a person with bad credit. The same can be true with promotions. For example, people in the armed forces may not be able to get clearance for classified documents and areas due to bad credit, therefore blocking potential advancement.

Housing:

Many apartment managers will run a credit check on prospective tenants. If your credit is poor, you may be denied a unit due to the risk that you may not be able to pay.

Deposits:

If you have bad credit, you may need to leave a deposit --or a larger deposit -- with certain companies than you would if you had good credit. Utility and cellular phone companies sometimes ask for deposits with people that have less-than-stellar credit.

Health:

In addition to all the financial aspects where bad credit will hurt you, it could also adversely affect your health. It’s not difficult to imagine that a person who has to pay a couple of hundred thousand dollars more for the same house as a neighbor down the street could have some financial stress in their life. This stress can affect a person both mentally and physically, if the bad credit is constantly a source of fighting in the house.

Bad credit is no longer a situation that can be isolated from other areas of your life. The trend is only growing stronger. Consumers must take the time to make the effort to keep their credit in good standing. It will pay off with more money in your pocket and less stress in your life.

The Basics of Credit

How the Credit Report Agencies Work

Your credit report is a record of how you've paid your bills in the past. Basically there are two types of credit reports: those provided to businesses and those provided to consumers. The credit reports have essentially the same type of information, though it is presented in different formats for each use.

Credit bureaus or credit-reporting agencies -- these terms are interchangeable -- are the companies that compile credit reports. There are three major, national credit reporting agencies in the United States: Experian (formerly TRW), Equifax and Trans Union, plus hundreds of smaller credit bureaus that are affiliated with one or more of the Big Three.

These specialized agencies get information from one or more of the three major bureaus and may supply additional credit information as well. If you have ever applied for housing rentals, mortgage or auto financing, employment, insurance, or any almost any type of credit, you have a credit report in your name (also called a credit file or credit history) at one or more of these credit bureaus.

Creditors (banks, credit card companies, finance companies etc.) supply credit bureaus with information they receive from applications and existing accounts. Creditors work with different credit reporting agencies, or may use a combination of credit reporting agencies. Every creditor does not report to all of the credit bureaus. It's the creditor's choice who they provide your information to.

Remember this important fact: Credit bureaus are independent entities that compete against each other for business. They do not share information with each other. And again, not all creditors report to all three major credit bureaus. If you have seen your credit report from these different companies you will notice that the information in each file may not be exactly the same. This is due to the fact that all your creditors may not work with each credit reporting agency, as well as the fact that each credit reporting agency may have slightly different reporting formats.

Here’s how information from your applications makes it to a credit reporting agency: You submit your application for credit, housing, employment or insurance to a company. That company uses the personal information from your application to order a single or a combination of credit reports from one or more of the major credit bureaus. What happens next is mostly automated. If the information you provided matches information that is currently in a credit reporting agency's databanks, a report is generated. If there is no match, a blank credit report is generated. In the meantime, identifying information about you -- name, address and social security number, for example, is going to be retained by the credit reporting agency. Once you do have an account with a lender, in most cases, it will be reported monthly, and sometimes every other month.

How to Request a Credit Report from All Three Agencies

The contact information for the three agencies below is only for ordering your credit report. If you need to talk to a representative about a specific account listed on your report, use the contact information specifically for issues and questions.

Credit Bureaus provide free credit reports when:

  • You have been denied credit or other benefits, or have received notice of a change of your credit status in the last 60 days.
  • You are unemployed, receiving welfare, or have been denied employment.
  • You believe you are a victim of fraud.
    Note: a recording accompanies this situation stating you are entitled to a free copy of your credit report each year.

In addition, state law entitles you to a free credit report if you live in Colorado, Georgia, Maryland, Massachusetts, New Jersey, or Vermont.

Requesting an Equifax report by Phone: 1.800.685.1111 (toll free)

This phone number puts you in touch with the Equifax credit report ordering system. The automated system guides you through the ordering process using your spoken answers to the system's questions; representatives are not available for assistance at this number. Payment can be made with a credit card or by check. Representatives at Equifax claim that this system can identify the state the caller is calling from and can also verify if certain inquiry information appears on the caller's credit report. In this way, they can process and deliver free credit reports to those who have been denied credit, insurance or employment, and can even prompt callers from qualified states (at this time, only California) to request their credit score.

Requesting your free Equifax credit report by mail:

Equifax Disclosures
PO BOX 105069
Atlanta GA 30348

Include a copy of your driver's license or a copy of a utility bill to verify your current address.

Purchasing an Equifax credit report by mail:

Equifax
PO BOX 105873
Atlanta GA 30348

Required information:

  • Full name including generation (Jr., Sr., I, II, III.)
  • Complete addresses for the last 2 years including apartment numbers.
  • Social Security Number
  • Date of Birth

Documentation requested

A copy of your driver's license, a utility bill, or other bill (dated recently) showing your name and the address listed on this request.

Equifax Credit Score

At this time, U.S. residents can only get a credit score by ordering it online with their Equifax report for a total cost of $12.95. The score is not yet available by mail unless you reside in the state of California. If you order your Equifax credit score you will also receive a list of 4 reason codes. These reason codes state the four main factors influencing your credit score. To learn what a credit score means, visit our credit scores section in the learning place.

Residents of California: To order your credit score by phone, you must use the automated system. The documentation will be delivered to you by mail. Don't forget to specifically state you want your credit score disclosed to you. The cost of your credit score is $8.50, in addition to the cost of the credit report if you are not entitled to a free one. Equifax representatives cannot see your credit score so they cannot discuss it with you over the phone.

How to Speak to An Equifax Representative About Your File

Equifax: 877.616.2276

This number dials directly to a representative. They may ask that you order a copy of your credit report through them first and that you call them back after you have it. You may have to persuade each company to talk to you if you get through without a credit report number.

Requesting your Experian Credit Report:

If you are not entitled to a free credit report, you will be required to pay $5.30 if you live in Connecticut; $2.00 in Maine; $3.00 in Minnesota; $8.00 in California or Washington state; and $8.50 if you live in any other state. Sales tax will be added where applicable.

Experian National Consumer Assistance Center
PO BOX 2104
Allen TX 75013-2104
888.397.3742
Hours: 9am-5pm (all time zones)

www.experian.com
Experian suggests you visit their website to order your credit report or challenge information through their online process.

Requesting your free Experian credit report:

If you are entitled to a free credit report, Experian requests a copy of the adverse action letter you received from the company that declined your application or otherwise took adverse action against you. They do not account for a situation where you do not have the letter in your possession, or you have never received an adverse action letter. However, under federal law you are also entitled to a free copy of your report if:

  • You have been denied credit or other benefits or in the last 60 days or have received notice of a change of your credit status.
  • You are unemployed, receiving welfare, or have been denied employment. You believe you are the victim of fraud.

In addition, state law entitles you to a free credit report if you live in Colorado, Georgia, Maryland, Massachusetts, New Jersey, or Vermont.

Required Information:

  • Full Name including Generation (Jr., Sr., I, II, III.)
  • Spouse's first name
  • Complete home addresses for the last 5 years including apartment numbers. (If you have moved within the last 6 months you will need to document your current address. See the documentation requirements listed above).
  • Social Security Number
  • Date of Birth

Experian representatives expect credit scores (on consumer reports delivered by mail) to be available to all fifty states in 2002. You should receive your report in 8 to 10 days following the receipt of your request.

Documentation requested:

If you have changed addresses in the last 6 months, you will need to provide two types of proof of address such as a copy of your driver's license, a utility bill, bank statement or other bill (dated recently).

Experian credit score

At this time, you can get your Experian/FICO score online at a cost of $8.50. Your score is not yet available by mail unless you reside in the state of California. Residents of California: You must specifically state you want your credit score disclosed to you in your credit report request letter, and pay an additional fee of $6.00.

To obtain your score, you must write to the following address:
Experian Credit Scoring
PO BOX 9601
Allen TX 75013

To learn what a credit score means, visit our credit scores section.

How to Speak to an Experian Representative about Your File:

Experian National Consumer Assistance Center
PO BOX 2104
Allen TX 75013-2104
(800) 583-4080
Hours: 9am-5pm (all time zones)

Experian's automated system will allow you to talk to a representative only after you have ordered and received a copy of your credit report. In order to get routed to a representative it is necessary for you to:

  1. Call the contact phone number found on your credit report.
  2. Key in the 10-digit credit report number found on the credit report
    If you fail to key in a valid number within the allotted time, you will be given a choice to either order your credit report or to disconnect.
Ordering Your Trans Union Credit Report

If you are not entitled to a free credit report, you will be required to pay $5.00 if you live in Connecticut; $2.00 in Maine; $3.00 in Minnesota; $8.00 in California or Washington state $1 in the US Virgin Islands; and $8.50 if you live in any other state. Sales tax will be added where applicable.

Trans Union Consumer Relations
PO BOX 1000
2 Baldwin Place
Chester PA 19022
800.888-4213 (Automated System) 24 hours a day

www.transunion.com
The Trans Union web site clearly spells out the best ways to request your report. You can order your credit report and score online with a credit card, but they will be mailed to you. Online delivery of credit reports is also available.

Requesting your Trans Union credit report by phone:

The system asks a series of questions and accepts your spoken answers to direct your request. If you are not entitled to a free report, you will be asked to mail your request to the address above with payment.

Include the personal information listed below under "Personal information for all written credit report requests."

Requesting your free Trans Union credit report:

Call the toll-free automated number above. You can use Trans Union's automated system to request your free report by phone if:
You have been denied credit or other benefits or in the last 60 days or have received notice of a change of your credit status.

Trans Union requests that you order your free copy of your credit report by mail (using the address above) if:

  • You are unemployed, receiving welfare, or have been denied employment.
  • You believe you have been the victim of fraud.
  • You live in Colorado, Georgia, Maryland, Massachusetts, New Jersey, or Vermont and have not already received a free copy this year (two per year in Georgia).

Personal information for all written credit report requests:

  • Full Name including Generation (Jr., Sr., I, II, III.)
  • Spouse's first name, if applicable
  • Complete home addresses for the last 2 years including apartment numbers
  • Social Security Number
  • Date of Birth
  • Name of your current employer

Documentation Requested:

No specific documentation is requested.

How to Speak to a Trans Union Representative about Your File

Trans Union Consumer Relations
PO BOX 1000
2 Baldwin Place
Chester PA 19022
800.916.8800
8:30am to 4:30pm CST

Contacting a Trans Union representative is fairly easy once they have mailed you a credit report. When you call, you'll be asked to provide the credit report number you've been provided.

Credit Scores

It's all in the numbers. A good credit score can open doors to better loans and insurance rates. Here's what you need to know about these all-important ratings.

What is a credit score?

A credit score is a mathematical algorithm used to predict risk. The formula compares factors associated with accounts that have been paid on time against those that have not been paid on time, to see what factors each type of consumer has in common. The number that comes out of this analysis is used in different ways to predict risk to the lender or company requesting the score.

Lenders use a credit score to help them make credit-granting decisions. Insurance companies use insurance scores to help them evaluate new and renewal insurance requests. Some employers use consumer scores to help them make hiring decisions.

There are different types of scores, though many are developed by the Fair, Isaac and Company, Inc. These are commonly referred to as FICO scores. Your credit score can be different depending on the formula used by the lender or credit bureau that calculates it, and it can change over time. Even a FICO-based score will be different depending on why or how it was prepared.

Your credit score is not permanent and it changes from day to day, from industry to industry, and differs from one credit bureau (or lender) to another. In addition, credit scoring systems evaluate all of the information on your credit report, whether the information is accurate or not. If there are errors on your credit reports you could wind up paying a higher interest rate for a loan or a credit card than what should be available to you because of these errors. In addition, there are common misconceptions about credit that may cause you to inadvertently hurt your score, and cost you money.

What you should know about credit scoring

Credit scores may not be available on your consumer credit report. A credit score is not currently available to you on your standard consumer credit report, unless you live in California or you order your credit report from Trans Union and request one. If you order your credit report online, however, there are companies who will add your credit score along with your credit report. The fee for this report plus score could be $25 or more.

What does the number indicate?

From our perspective, knowing your credit score is only partially useful.
Sure, it may be comforting to know that you are 712 out of a possible 900, or that you have improved from a 585 to a 630. But much more important is knowing how to achieve the best score regardless of the method used. If you are a 585 now, and you remove incorrect information that is having a negative affect on your credit, your credit will improve and the offers you get will be relatively better as well. Remember that the goal is gaining control and saving money, not just raising or changing a numerical score.

A consumer has many credit scores. Credit scores come from many sources. Companies build custom credit scoring models for different industries including credit cards, real estate financing, and insurance. Your credit score differs depending on what type of credit you are seeking and to whom you apply. Though many lenders incorporate FICO scores into their decision-making process, there is no single acceptable score used by all lenders, rather it varies between industries and credit type. It is important to note that your score will be different, depending on the source -- different credit bureaus, different lenders, etc. It's worth repeating: you do not have a single credit score!

Types of Credit Scores

Below is a list and brief description of some of the different types of consumer scores.

  • Insurance bureau score:
    An insurance rating based solely on credit bureau data stored at the major credit bureaus. It offers a snapshot of an individual's insurance risk at a particular point in time, and helps insurers evaluate new and renewal auto and homeowner insurance policies. It may also influence the rate you are offered.
  • Application score:
    The use of a statistical model to objectively evaluate and assign a numerical value to credit applications and credit bureau data in order to assess likely future performance. Application scores help businesses make decisions such as whether to accept or decline the application.
  • FICO scores:
    Credit bureau risk scores produced from models developed by Fair, Isaac and Company, Inc. are commonly known as FICO scores. Fair, Isaac credit bureau scores are used by lenders and others to assess the credit risk of prospective borrowers or existing customers, in order to help make credit and marketing decisions. These scores are derived solely from the information available on credit bureau reports.
  • BEACON score:
    A customized FICO score produced at Equifax based on the models developed by Fair, Isaac.
  • Experian/Fair Isaac Score:
    A customized FICO score produced at Experian based on models developed by Fair, Isaac.
  • EMPIRICA:
    A customized FICO score produced at Trans Union based on the models developed by Fair Isaac.
  • Behavioral scores:
    Lenders, especially credit card issuers, will often analyze their current customers' purchasing and payment habits to predict their future behavior. This information may be used to determine credit limit increases or future promotions. In some cases, consumers who are showing very risky behavior may find their accounts closed.
The Credit Score Formula

According to FICO, the factors that make up your credit score fall into five main categories. The categories are listed below along with a percentage reflecting the relative weight they carry in making up your score.

  • Payment history 35%
  • Amounts you owe 30%
  • Length of credit history 15%
  • New credit 10%
  • Type of credit in use 10%

Note that of the categories above, the two most important are payment history (past and present), and amounts you owe (your current debt load). Together, these categories carry 65% of the weight of all information taken from your credit history and are key factors used to determine your credit worthiness on any particular application.

Getting Credit Reports

There are many companies that provide credit reports. One of the best ones is Advantage Credit. Find them at www.advantagecredit.com they don’t provide credit reports to credit repair companies at the moment but who knows in the future.

Another one is: www.creditplus.com

A free option is www.annualcreditreport.com. Just be ready to answer some questions about your customer’s credit report

What is ChexSystems?

ChexSystems provides deposit account verification services to its financial institution members to aid them in identifying account applicants who may have a history of account mishandling (for example, people whose accounts were overdrawn and then closed by them or by their bank). ChexSystems is also licensed to do business as ChexSystems Collection Agency providing debt collection services to members participating in this service.

Is ChexSystems a credit bureau?

ChexSystems is a consumer-reporting agency governed by the Fair Credit Reporting Act (FCRA) and other laws. ChexSystems Collection Agency is a debt collector subject to the Fair Debt Collection Practices Act (FDCPA) and other laws. The Federal Trade Commission enforces the FCRA and FDCPA.

How long does the report stay on file? How do I get it deleted?

Each report submitted to ChexSystems remains on our files for five years, unless the bank or credit union that filed the report requests its removal or ChexSystems becomes obligated to remove it under applicable law. The decision to delete a report is entirely up to each bank or credit union and its individual policies.

I paid the bank. Why wasn't the report removed?

A reporting member is under no obligation to remove an accurate report of account mishandling due to payment of monies owed. However, if a collection amount is reported, the member is obligated to mark the account as paid.

How can I see what is in my file?

You can order a copy of your report from ChexSystems.

How do I dispute information?

ChexSystems Consumer Relations Department helps people who believe their file contains misinformation. Visit disputes for more information.

Why do I have to give you personal information, like my social security number and drivers license number?

ChexSystems ask for this information to ensure that they make a complete and accurate search and are able to identify all information that may pertain to you.

Why did you tell the bank not to open an account for me?

ChexSystems neither approves nor declines accounts for banks and credit unions. The decision is entirely up to them.

Why wasn't my ChexSystems report removed when I filed bankruptcy?

A bankruptcy filing only affects the collection of outstanding debts. It does not require the removal of accurate factual information concerning your account.

Why can't I get a copy of my spouse's report?

ChexSystems is required by law to deal directly with the individual to whom the information pertains. They strictly adhere to this to protect consumer privacy. To discuss the information with anyone else, ChexSystems must receive a notarized Power of Attorney or specific written instructions, signed by the consumer whose information is being requested, authorizing ChexSystems to disclose the information to the person named in the Power of Attorney.

What does NSF activity mean?

NSF – or non-sufficient funds – activity refers to overdrafts that occur on an account.

Do I pay ChexSystems or the bank?

It depends. If your report contains a record of an outstanding debt and you have received collection notices from ChexSystems Collection Agency, you pay ChexSystems Collection Agency directly by sending your check or money order to:

ChexSystems
ATTN: Dept. C
1550 E 79th St.
Minneapolis, MN 55425

In other cases, you pay the bank or credit union directly.

How do I add a statement to my file?

You are entitled to add a brief statement to your consumer file describing the nature of your dispute of the information. If you wish to add a statement to your file, you must submit your statement in writing with a clear indication that you wish the statement to be added to your file, ensuring that you sign the request. If you would like assistance in writing a clear summary of your statement, you may contact ChexSystems or obtain the assistance from your Attorney.

How do I contact ChexSystems?

CALL:

ChexSystemsConsumer Relations
1-800-428-9623
(Recording only-Instructions)

WRITE:

ChexSystems
Attn: Consumer Relations
12005 Ford Road - Suite 600
Dallas, TX 75234

Reading Your Report

Between the lines. Familiarize yourself with the contents of your credit report and learn how to read it.

Types of information reported

The type of information contained on credit reports is fits into four categories: personal information, account information, public record information, and inquiries.

Personal information

Personal information and any variations supplied by either you or your creditors. Such information may include:

  • Full name including Jr., Sr., or I, II, III
  • Address used when requesting this credit report
  • Previous address information
  • Social Security number
  • Year or date of birth
  • Current and former employer information
  • Any variations of your personal information on file, such as nicknames former names, different social security numbers, different addresses, etc.

What to look for:

Make sure all of your personal information including former addresses, previous and current employers and any other information is correct.

Account or Tradeline information

This is a list of accounts you currently have or have had in the past. Accounts are also called trade lines.
Information includes:

  • Account name and number
  • Original account data such as date account opened, closed
  • Monthly payment amount rounded off to the nearest dollar
  • Monthly payment history, usually covering at least 24 months
  • Current status of account (paid as agreed, 30 days late, etc.)
  • The types of accounts that normally appear on your credit report are:
  • Credit cards, department store cards, gas company cards Bank loans, auto loans, auto leases, and mortgages
  • Consumer finance company accounts
  • Retail credit cards such as Circuit City
  • Recreational vehicle loans
  • Credit union credit cards or loans

Types of accounts that do not generally appear on your standard credit report:

  • Rent-to-own accounts
  • Checking account information
  • Accounts with smaller institutions

If you are unsure whether an account will be reported to the national credit bureaus just ask. Some accounts, such as some gas company credit cards, will only be reported if you pay late — not if you pay on time. Also, there are specialized types of consumer reporting agencies that collect and report information about checking accounts for retailers and financial institutions.

Ratings codes

Credit bureaus traditionally used codes to summarize the current rating on an account. Now when you receive your report, you’re more likely to get a plain English explanation of the current status of an account, rather than a code. But since they may still show up on some reports — or may appear on the reports supplied to lenders — we’ve provided the ratings codes below.

The codes consist of a letter describing the type of account, and a number describing the current payment status.

Letter codes for common accounts:

  • O: Open Account (usually must be paid in full in 30, 60 or 90 days)
  • R: Revolving Account
  • I: Installment Account
  • M: Mortgage
  • C: Line of Credit

Numeric codes for current payment status:

  • 00: Not rated, too new to rate, or not used
  • 01: Paid as agreed
  • 02: Paid 30 days late, or not more than one payment past due
  • 03: Paid 60 days late, or two payments past due
  • 04: Paid 90 days late, or three payments past due
  • 05: Paid 120 days late
  • 07: Making regular payments under a wage earner bankruptcy plan or credit counseling plan
  • 08: Repossession
  • 8A: Voluntary Repossession
  • 8D: Legal Repossession
  • 8P: Payment to a Repossessed Account
  • 8R: Repossession Redeemed 8R
  • 09: Bad Debt; Charged off Account
  • 9B: Collection Account
  • 9P: Payment to a charged off account
  • UR: Unrated
  • UC: Unclassified
  • RJ: Rejected

An account with an R-1 rating would generally be viewed favorably since the current status is paid on time. Older information about the tradeline, such as late payments may be listed along with the tradeline, however, and that could count against you.

What to look for:

The tradeline section contains the meat of your credit report and should be reviewed in great detail for errors. Find out about any potential problems now, before you are in the middle of a loan application. Public record and collections information A public record is a legal action recorded at the courthouse. All public record entries are derogatory though there are some factors that contribute to how serious these entries are.

Commonly reported public record information:

  • Judgments against you
  • Federal, state and county liens
  • Bankruptcy filings

There are some major differences between creditor trade lines and public record entries. Public record entries are made up of different information. There is no account number, there is no credit limit and there is no a payment history. They also have no rating, but are considered negative.

The degree to which public record items affect your credit depends on:

  • Type of entry (tax lien, judgment, bankruptcy or other)
  • The age of the entry (how long ago it happened)
  • The amounts of the entry (generally, the higher the amount, the worse it is)
  • Whether or not it has been satisfied (paid)

Credit bureaus hire companies to gather this data for them. Since this can be a manual process, there is room for clerical errors. Bankruptcy information is frequently incomplete or reported incorrectly. Normal tax bills are sometimes reported as liens, or liens can be reported with wrong information. Judgments may be reported prematurely. Collection accounts will also appear in this section of the report. Collection information can easily be incomplete, out-of-date or inaccurate, so it is important to pay attention to this section carefully.

What to look for:

Carefully scrutinize this section for mistakes or incomplete information. See the chapter on instructions for correcting mistakes for more information on incorrect public record or collection accounts.

Inquiries

When you apply for a loan the lender will request your credit history. This request will create an inquiry. There are many different types of inquiries, but only one type you should be concerned with -- credit inquires resulting from your own personal requests for credit. When consumers request a copy of their credit report, it is called a consumer inquiry and is not shown to potential creditors. When a credit card company develops a mailing list for pre-approved credit offers, it will typically generate a promotional inquiry. (You can remove your name from these marketing lists by calling 1-888-5OPT-OUT.) This type of inquiry is also not shown to creditors. Your current lenders may review your account periodically, creating an account review inquiry. This type of inquiry generally is not shown to creditors.

Inquiries created when you apply for credit affect your credit, and may be unfavorable if you have too many within a short period of time. Remember, the following inquiries do not affect your ability to get credit: promotional inquiries, consumer inquiries, account review inquiries, or inquiries by employers or insurance companies.

Mortgage and auto-related inquiries

Consumers have begun to shop more frequently on the Internet because they are finding better deals. Typically, when you fill out an application at one site, each and every lender that considers your application will obtain a copy of your credit report. This can create multiple inquiries, something you need to be careful of. In addition, some consumers have found that auto dealers will obtain their credit report -- sometimes without their knowledge -- to see what kind of car they may be able to afford. If your credit report is less than perfect, the auto dealer may shop the application with several lenders, again creating multiple inquiries.

To address these problems, there is a special policy regarding mortgage and auto-related inquiries. All mortgage and auto-related inquiries within the most recent 30-day period are ignored, while mortgage-related inquiries or auto-related inquiries within a 14-day period (before the most recent 30-day period) are treated as a single inquiry. There is no special policy regarding general credit inquiries or credit card related inquiries. The problem arises when those inquiries cannot be specifically identified as mortgage or auto-related. In those cases, they can count in the total number of inquiries.

Generally, credit-reporting agencies will not remove inquiries -- even if you did not authorize them -- because they are considered to be a matter of record. The exception to this rule would be considered if you are victim of credit fraud (and can document it). Then the reporting agency may be willing to suppress all the unauthorized inquiries so that they will only appear on the report you see and not be transmitted to anyone else.

What to look for:

The inquiry section will let you know who's looking into your credit report. Keep your eye out for any unfamiliar companies. If you do not recognize a particular company who has inquired into your credit history, keep this in mind: It could be that they hired an outside research company to retrieve the credit report on their behalf. When you signed the application you authorized them to do this. If you believe your credit report contains truly unauthorized inquiries, visit the section on disputing mistakes (below) for instructions on how to handle them.

Who Has Access To Your Credit Report?

In most cases, a company does not need to get your permission — written or otherwise — to get a copy of your credit report. The Fair Credit Reporting Act allows companies to obtain a credit report for:

  • Employment purposes (by a prospective or current employer) provided they get the consumer's written permission first
  • Insurance underwriting purposes (including when your policy is up for renewal)
  • An extension of credit or the review or collection of an existing credit account
  • A legitimate business purposes in connection with a business transaction initiated by the consumer
  • Per court order or in conjunction with certain requests involving child support

Credit bureaus also have their own internal standards regarding to whom they will sell credit reports. For a company to get credit reports, they'll generally have to set up an account with the credit reporting agency and meet certain business standards before they can purchase them. Still, people do obtain credit reports illegally for different purposes, so you'll want to make sure your report doesn't show access by someone who shouldn't have gotten it.

How long can information be reported?

There are certain legal restrictions regarding how long information can remain on your credit report. Credit reporting agencies are not allowed to report any information that is obsolete, incomplete, or erroneous. Currently, the federal Fair Credit Reporting Act places the following limitations on reporting of obsolete information:

  • Bankruptcy Filings:
    No longer than ten years from the filing date. (This is different than the discharge date, which is the date when the bankruptcy ends.) All three major credit bureaus, and many smaller ones, have agreed voluntarily to remove Chapter 13 bankruptcies -- a bankruptcy where debts are paid back over several years -- seven years from the date of filing. This doesn't always happen immediately, so you may have to ask.
  • Civil suits, civil judgments, records of arrest:
    No longer than seven years from the date of entry, or the current governing statute of limitations, whichever is longer.
  • Paid tax liens
    No longer than seven years from the date satisfied.
  • Unpaid tax liens:
    Indefinite until the lien is paid (See above).
  • Collection or charge-off accounts:
    No longer than seven years unless this is a US Government insured or guaranteed student loan, or National Direct Student Loan (NDSL).
  • Any other adverse information (including late payments):
    No longer than seven years. Adverse information is any data that may cause an undesired or unfavorable action to the consumer, such as a decline in credit, employment or insurance, an increase in the charge for credit or insurance, or less favorable terms on the credit or insurance that a consumer has or is seeking.

When does the 7-year period start?

For collection or charge-off accounts or other adverse accounts, the 7-year clock starts ticking 180 days — 6 months — from the original date of delinquency that led to the collection or charge-off. It does not start when the account was placed for collection or to the date of last activity, However, that only applies to account information added to a credit report on or after December 29, 1997, due to revisions of the Fair Credit Reporting Act that clarified those dates. For information about those types of accounts added to your credit report before that date, you should be able to get the credit reporting agency to remove them after the 7 1/2 year time period if you can demonstrate the original date of delinquency.

For example:
Let’s say you first fell behind on your March 1998 payment. You were unemployed and didn't make your payments for six months, so the card issuer charged it off in October of 1998. In May 1999 — more than a year after you stopped paying — EZE Pay Collection Agency obtained the account. Under the old law, the reporting period could start seven years from the date the account was placed with EZE Pay (seven years from May 1999). Under the new law, however, EZE Pay would be required to let the credit bureau know the original date of delinquency — March 1998 — and the credit bureau would start the seven-and-a-half-year clock then. This can make a tremendous difference in the amount of time an account is reported. It also means that if you don't pay it, a new seven-year account cannot be started just by placing it with another collection agency. If any collection agency tells you they can report your information forever, they must be planning to do something illegal!

For collection or charge-off accounts added to your report before Jan. 1, 1998, you'll have a harder time demonstrating the original date of delinquency. The collection agency may be unwilling to provide you with any information about the original account, and in fact, may not have it. You will have to go back to the original creditor, if possible, to get the account history. Even for more recent accounts it can be hard to tell when an account fell behind. If you cannot clearly identify on your report exactly when late payments occurred, call the credit reporting agency. By law they are required to explain anything you don't understand. If the dates are incorrect, or if the credit reporting agency representative cannot identify when they occurred, either supply documentation to correct them or dispute them and provide what you believe are the accurate dates. It would also be a good idea to contact the lender for clarification.
Information about accounts that are paid on time may be reported indefinitely.

What to look for in the Credit Report

  1. Name and subscriber numbers of reporting institutions.
  2. Loan account numbers.
  3. Date of accounts opening.
  4. Original amount of accounts.
  5. How promptly payments were made (payments of less than 30 days are not reported).
  6. How often payments were late.
  7. When and if accounts were paid.
  8. Were the accounts paid as agreed.
  9. How accounts were secured.
  10. Repossessions.
  11. Charge-offs.
  12. S.C.N.L – (cannot locate; left with no forwarding address available).
  13. Closed or open accounts.
  14. Judgments.
  15. Bankruptcies.
  16. Liens (old and new).

Most of your report will be in an abbreviated form. The information on your report is based on how it was given to the bureau by the subscriber/lender.

Things to Look for in Your Report: errors and/or inaccuracies, misleading information, incomplete information, outdated derogatory reports

NOTE: All derogatory information should be removed after a given amount of time-Seven years for late payments, hens, judgments, charge offs, repossessions, etc. Bankruptcy should be removed after ten years.

However, your entire credit history can be requested if you have: Applied for life insurance in excess of $50,000, applied for a high-paying job, or applied for credit in excess of $50,000.

How To Recognize A Credit Repair Scam

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Are You Tired of Creditors Harassing You?
Did You Know That You Have Legal Rights?

Knowledge is power against creditors. There are numerous of laws that protect us against creditors and collection practices. It’s time to get educated, it’s time to end collection harassment calls.

Presently, there’s more and more consumer struggling to pay off their debt, some collection agencies are opting for unfair means to collect payments from debt-ridden consumers ignoring the debt collection laws. However, to stop such malpractices and help debtors combat such illegal collection agency harassment, the FTC has come forward with the FDCPA, which gives debtors legal rights to sue those debt collectors who illegally threaten, intimidate or harass them.

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Do’s and Don’ts from Debt Collectors

To wipe out abusive, deceptive and unfair debt collection practices undertaken by the collection agencies, the Federal Trade Commission (FTC) has ensured some guidelines for the debt collectors under the Fair Debt Collection Practice Act (FDCPA). These guidelines help you fight debt collection harassment efficiently. Check out the 10 rules that the debt collectors need to follow while collecting debts from you.

  1. Can’t ask to pay more than you owe:
    According to the FDCPA, a collection agency can never misrepresent the debt amount or demand more amount than what you owe. [15 USC 1692e] § 807(2)(a).
     
  2. Can’t add additional fees:
    A debt collection agency can never ask you to pay more than what was in the original loan arrangement (principal, interest rate or other fees). This is not allowed under the FDCPA. [15 USC 1692f] § 808(1).
     
  3. Can’t use obscene language:
    A debt collector can’t make use of profane or obscene language while talking to a debtor. According to the FDCPA, using abusive language while collecting debt is illegal and is considered as debt collection harassment. [15 USC 1692d] § 806(2).
     
  4. A debt collector can’t call repeatedly:
    If any debt collector calls repetitively, this is treated as harassment under the FDCPA. [15 USC 1692d] § 806(5). Again, a debt collector is not allowed to call you before 8:00 am or after 9:00 pm and on Sundays. [15 USC 1692c] § 805(a)(1). This law has specially been implemented to stop collection calls harassment.
     
  5. A debt collector can’t call you at your workplace: Under the FDCPA, a debt collector is not allowed to contact you at your workplace after knowing that you are not comfortable receiving such calls there. Again, unless the debt is past-due child support, a debt collector cannot reach out your employer for the same. [15 USC 1692c] § 805(a)(3).
     
  6. Can’t use violent activities:
    If a debtor doesn’t pay the debt, a collector can’t make use of violence or other criminal measures to harm the person’s reputation, or his physical property. [15 USC 1692d] § 806(1).
     
  7. Can’t threat you to sue if it is not intended:
    A collection agency can’t threaten to sue you, cease your property, garnish your wages, or spoil your credit score if it’s not intended to be taken. [15 USC 1692e] § 807(5).
     
  8. Can’t disclose your debt to a third party:
    A debt collection agency can’t disclose your debts to any third party without your prior permission. However, there are some exceptions. It can be disclosed to the following persons:
    • The creditor
    • Your attorney
    • The creditor's attorney
    • Your spouse
    • A credit reporting agency
    • Your parents (in case you’re a minor) [15 USC 1692c] § 805(b)
     
  9. Can’t avoid sending you a debt validation notice:
    Within 5 days of the initial communication, a debt collection agency must send you a debt validation notice. This notice includes the debt amount, the name of the creditor to whom the debt is owed, and a statement that says that if the debtor doesn’t dispute the validity of the debt within 30 days, the debt will be assumed as valid. [15 USC 1692g] § 809(a).
     
  10. Can’t contact the debtor twice if receives "cease communication" notice: The debt collection agency can contact the debtor only once (via mail) after receiving "cease communication" notice to tell about any one of the following:
    • Further attempts to collect the debt are being terminated.
    • The collection agency is going to take certain legal actions. [15 USC 1692c] § 805(c)
     

If a collector does not abide by the aforementioned laws or rules and you face collection harassment, then you can file a lawsuit against him. If you win the case, then the collector will be penalized by the court.

How to Handle Harassment Collection Calls

Now when you know what the collection agencies can’t do to collect money from you, you might be feeling somewhat relaxed. But what if a collection agency goes on harassing you in spite of knowing the FDCPA and debt collection laws? How to find out ways to stop harassing collection calls in order to have a peace of mind. Go through the following lines to know what you can do to stop collection agency harassment:

  1. Record all the collection calls, including the ones you make.
  2. Make a note of the time, date, name of the representative with whom you speak, what is being said, and the name of the collection agency.
  3. Try to get a witness to the harassment. This might be a family member, friend or neighbor.
  4. Make use of an answer-phone so that you can screen the numbers from where you are getting calls.
  5. If the collection agency is not aware of your telephone number, then just dial 141 before making calls to them. This will help you keep back your number from them.
  6. Try to reach out your telephone service provider and see if they can provide you with the privilege to block specific phone numbers.
  7. If the collection agency makes every correspondence in writing, then keep copies of all those correspondence for future reference.

Reporting Creditor Harassment

These days, you can easily report creditor or debt collectors harassment online. However, if you have evidence of the dates, times and exactly what was said, victory can be yours. Below are the organizations with which you can file a complaint of creditor harassment.

  1. Federal Trade Commission - Online Complaint Form
    The Federal Trade Commission (FTC) receives thousands of complaints each day regarding abusive collection calls. Though it’s not possible for them to investigate every single case, if you complain against a specific agency, then they will certainly take necessary action.
     
  2. State Attorney General
    You can report creditor harassment to your state Attorney General’s office. Visit the official website of your state Attorney General and make use of the online form to register your complaint.
     
  3. Better Business Bureau
    Better Business Bureau (BBB) is the place where you can register a complaint against any business. If any collection agency is harassing you, then you can certainly register a grievance with them.
     
  4. The ACA
    The Association of Credit and Collection Professionals (ACA) is a collection agency trade association. Even if the collection agency harassing you is not a member of the community, don’t hesitate to file a complaint, as in future they will think twice before enrolling them as a member.
     
  5. National Association of Consumer Advocates (NACA)
    If you are being harassed, you can reach out a consumer attorney for assistance. The National Association of Consumer Advocates (NACA) is a nationwide organization of more than 1,500 attorneys who represent thousands of consumers victimized by deceptive, abusive and greedy business practices.
     

How to End Creditor Harassment

If any collection agency is calling you repetitively, you must be thinking of putting an end to those uninterrupted collection calls harassment. Below are some means that you could use against the collection agencies to stop the annoying bill collection harassment.

  1. Seek legal help:
    If the situation is worst and you have no clue about how to deal with the repetitive collection calls harassment, then you should immediately contact a consumer attorney and seek necessary legal help. A consumer attorney can advise you of the appropriate course of action. He can even talk to your creditors /collectors on your behalf and represent you in court.
     
  2. Settle your debts:
    A debt settlement with the collection agency can be a good solution to avoid creditor harassment. Approach a trustworthy debt settlement company and seek help from them. A consumer debt settlement company can help you settle your debts by paying much less than what you owe.
     
  3. Take the creditor to Small Claims Court:
    If you think that the collection agency is breaking the FDCPA laws or you don’t owe the debt, you can sue the collection agency in the small claims court. Small claims court is a legal body, which resolves disputes for small amount of money, usually less than $3000. Claims courts are less expensive and affordable for the consumers as getting help from a lawyer is not mandatory. However, since 2010, the costs of filing fees have increased in almost every state throughout the US.
     
  4. Cease & Desist letter:
    You can send a Cease and Desist Letter to the collection agency and ask them to stop all communication with you regarding the debt. Also, tell the creditor/collector to not furnish any erroneous information on your credit report as it’s illegal according to the FDCPA.
     
  5. Debt collector phone communication log:
    Once you have sent a cease and desist letter to the creditor, he should stop all communications including phone calls. After this, you can maintain a phone communication log to fight any further creditor harassment. This phone communication log is intended to maintain the entire documentation of phone calls received. Below is given a sample phone communication log for your convenience.
     

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What is Identity Theft

Identity theft is a serious crime. It can disrupt your finances, credit history, and reputation, and take time, money, and patience to resolve. Identity theft happens when someone steals your personal information and uses it without your permission.

Identity thieves might:

  • Go through trash cans and dumpsters, stealing bills and documents that have sensitive information.
  • Work for businesses, medical offices, or government agencies, and steal personal information on the job.
  • Misuse the name of a legitimate business, and call or send emails that trick you into revealing personal information.
  • Pretend to offer a job, a loan, or an apartment, and ask you to send personal information to "qualify."
  • Steal your wallet, purse, backpack, or mail, and remove your credit cards, driver's license, passport, health insurance card, and other items that show personal information.

How to Protect Your Information

  • Read your credit reports. You have a right to a free credit report every 12 months from each of the three nationwide credit reporting companies. Order all three reports at once, or order one report every four months. To order, go to annualcreditreport.com or call 1-877-322-8228.
  • Read your bank, credit card, and account statements, and the explanation of medical benefits from your health plan. If a statement has mistakes or doesn’t come on time, contact the business.
  • Shred all documents that show personal, financial, and medical information before you throw them away.
  • Don’t respond to email, text, and phone messages that ask for personal information. Legitimate companies don’t ask for information this way. Delete the messages.
  • Create passwords that mix letters, numbers, and special characters. Don’t use the same password for more than one account.
  • If you shop or bank online, use websites that protect your financial information with encryption. An encrypted site has "https" at the beginning of the web address; "s" is for secure.
  • If you use a public wireless network, don’t send information to any website that isn’t fully encrypted.
  • Use anti-virus and anti-spyware software, and a firewall on your computer.
  • Set your computer’s operating system, web browser, and security system to update automatically.

Red Flags of ID Theft

  • Mistakes on your bank, credit card, or other account statements.
  • Mistakes on the explanation of medical benefits from your health plan.
  • Your regular bills and account statements don’t arrive on time.
  • Bills or collection notices for products or services you never received.
  • Calls from debt collectors about debts that don’t belong to you.
  • A notice from the IRS that someone used your Social Security number.
  • Mail, email, or calls about accounts or jobs in your minor child’s name
  • Unwarranted collection notices on your credit report.
  • Businesses turn down your checks.
  • You are turned down unexpectedly for a loan or job.

What is Fraud Alert?

There are two types of fraud alerts: an initial alert, and an extended alert.

  • An initial fraud alert stays on your credit report for at least 90 days.
    You may ask that an initial fraud alert be placed on your credit report if you suspect you have been, or are about to be, a victim of identity theft. An initial alert is appropriate if your wallet has been stolen or if you’ve been taken in by a "phishing" scam. With an initial fraud alert, potential creditors must use what the law refers to as "reasonable policies and procedures" to verify your identity before issuing credit in your name. However, the steps potential creditors take to verify your identity may not always alert them that the applicant is not you. When you place an initial fraud alert on your credit report, you’re entitled to order one free credit report from each of the three nationwide consumer reporting companies, and, if you ask, only the last four digits of your Social Security number will appear on your credit reports.
     
  • An extended fraud alert stays on your credit report for seven years.
    You can have an extended alert placed on your credit report if you’ve been a victim of identity theft and you provide the consumer reporting company with an Identity Theft Report. An automated Identity Theft Report, such as the printed ID Theft Complaint available from this Web site, should be sufficient to obtain an extended fraud alert. With an extended fraud alert, potential creditors must actually contact you, or meet with you in person, before they issue you credit. When you place an extended alert on your credit report, you’re entitled to two free credit reports within twelve months from each of the three nationwide consumer reporting companies. In addition, the consumer reporting companies will remove your name from marketing lists for pre-screened credit offers for five years unless you ask them to put your name back on the list before then.
     

To place either of these alerts on your credit report, or to have them removed, you will be required to provide appropriate proof of your identity: that may include your Social Security number, name, address and other personal information requested by the consumer reporting company.

As mentioned, depending on the type of fraud alert you place, potential creditors must either contact you or take reasonable steps to verify your identity. This may cause some delays if you’re trying to obtain credit. To compensate for possible delays, you may wish to include a cell phone number, where you can be reached easily, in your alert. Remember to keep all contact information in your alert current.

What does a fraud alert not do?

While a fraud alert can help keep an identity thief from opening new accounts in your name, it’s not a solution to all types of identity theft. It will not protect you from an identity thief using your existing credit cards or other accounts. It also will not protect you from an identity thief opening new accounts in your name that do not require a credit check – such as a telephone, wireless, or bank account. And, if there’s identity theft already going on when you place the fraud alert, the fraud alert alone won’t stop it. A fraud alert, however, can be extremely useful in stopping identity theft that involves opening a new line of credit.

What is Credit Freeze?

Many states have laws that let consumers "freeze" their credit – in other words, letting a consumer restrict access to his or her credit report. If you place a credit freeze, potential creditors and other third parties will not be able to get access to your credit report unless you temporarily lift the freeze. This means that it’s unlikely that an identity thief would be able to open a new account in your name. Placing a credit freeze does not affect your credit score – nor does it keep you from getting your free annual credit report, or from buying your credit report or score.

Credit freeze laws vary from state to state. In some states, anyone can freeze their credit file, while in other states, only identity theft victims can. The cost of placing, temporarily lifting, and removing a credit freeze also varies. Many states make credit freezes free for identity theft victims, while other consumers pay a fee – typically $10. It’s also important to know that these costs are for each of the credit reporting agencies. If you want to freeze your credit, it would mean placing the freeze with each of three credit reporting agencies, and paying the fee to each one.

You can find more information about credit freeze laws specific to your state by clicking here, including information on how to place one.

Who can access my credit report if I place a credit freeze?

If you place a credit freeze, you will continue to have access to your free annual credit report. You’ll also be able to buy your credit report and credit score even after placing a credit freeze. Companies that you do business with will still have access to your credit report – for example, your mortgage, credit card, or cell phone company – as would collection agencies that are working for one of those companies. Companies will also still be able to offer you prescreened credit. Those are the credit offers you receive in the mail that you have not applied for. Additionally, in some states, potential employers, insurance companies, landlords, and other non-creditors can still get access to your credit report with a credit freeze in place.

Can I temporarily lift my credit freeze if I need to let someone check my credit report?

If you want to apply for a loan or credit card, or otherwise need to give someone access to your credit report and that person is not covered by an exception to the credit freeze law, you would need to temporarily lift the credit freeze. You would do that by using a PIN that each credit reporting agency would send once you placed the credit freeze. In most states, you’d have to pay a fee to lift the credit freeze. Most states currently give the credit reporting agencies three days to lift the credit freeze. This might keep you from getting "instant" credit, which may be something to weigh when considering a credit freeze.

What does a credit freeze not do?

While a credit freeze can help keep an identity thief from opening most new accounts in your name, it’s not a solution to all types of identity theft. It will not protect you, for example, from an identity thief who uses your existing credit cards or other accounts. There are also new accounts, such as telephone, wireless, and bank accounts, which an ID thief could open without a credit check. In addition, some creditors might open an account without first getting your credit report. And, if there’s identity theft already going on when you place the credit freeze, the freeze itself won’t be able to stop it. While a credit freeze may not protect you in these kinds of cases, it can protect you from the vast majority of identity theft that involves opening a new line of credit.

What is the difference between Fraud Alert & Credit Freeze?

A fraud alert is another tool for people who’ve had their ID stolen – or who suspect it may have been stolen. With a fraud alert in place, businesses may still check your credit report. Depending on whether you place an initial 90-day fraud alert or an extended fraud alert, potential creditors must either contact you or use what the law refers to as "reasonable policies and procedures" to verify your identity before issuing credit in your name. However, the steps potential creditors take to verify your identity may not always alert them that the applicant is not you.

A credit freeze, on the other hand, will prevent potential creditors and other third parties from accessing your credit report at all, unless you lift the freeze or already have a relationship with the company. Some consumers use credit freezes because they feel they give more protection. As with credit freezes, fraud alerts are mainly effective against new credit accounts being opened in your name, but will likely not stop thieves from using your existing accounts, or opening new accounts such as new telephone or wireless accounts, where credit is often not checked. Also, only people who’ve had their ID stolen – or who suspect it may have been stolen, may place fraud alerts. In some states, anyone can place a credit freeze.

What to do if the Police take a report about id theft over the Internet or Telephone?

The FTC ID Theft Complaint has a special section for police reports that are not filed face-to-face, to help you use it to supplement an automated police report. If you file a police report online or over the phone, complete the "Automated Report Information" block of the ID Theft Complaint. Attach a copy of any filing confirmation received from the police. If you have a choice, however, you should file your police report in person and not use an automated report. It is more difficult for the consumer reporting company and information provider to verify the information in an automated report, and they will likely require additional information and/or documentation.

Should I Apply for a New Social Security Number?

Under certain circumstances, the Social Security Administration may issue you a new Social Security number - at your request - if, after trying to resolve the problems brought on by identity theft, you continue to experience problems. Consider this option carefully. A new Social Security number may not resolve your identity theft problems, and may actually create new problems. For example, a new Social Security number does not necessarily ensure a new credit record because credit bureaus may combine the credit records from your old Social Security number with those from your new Social Security number. Even when the old credit information is not associated with your new Social Security number, the absence of any credit history under your new Social Security number may make it more difficult for you to get credit. And finally, there’s no guarantee that a new Social Security number wouldn’t also be misused by an identity thief.

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