Category Archives: Credit Report

7 Persistent Credit Report Myths

Posted on by

There are myriad myths and misconceptions about a gamut of different topics, but few are as persistent as these 7 credit report myths that live on to this day. Worse still is that the whole subject is technical, which makes these persistent myths about it all the more impressive and annoying at the same time – they just will not go away.

Perhaps what keeps them alive is that most of them are preconceived misconceptions. They are mistaken assumptions that can easily be made by anyone, regardless of how long they have been around. Do you still believe in some of these credit score myths and misconceptions?

Myth#1 – Checking Your Credit Report & Score Can Lower Your Score

To become financially savvy and in control, you need accurate data from reliable sources. Checking your credit report and score is a recommended way to do just that; personal inquiries into your credit standing – these are called “soft inquiries” – do not reflect on the credit report and do not impact your credit score. In fact it is highly recommended that you keep a close watch on your score if it goes south, so you can monitor the progress of your finances and assert control based on what you observe. You can obtain a free credit report once an year and this will not damage your score in any way. It is your right to examine them.

Myth#2 – There are Quick Fixes that You Can Use for Bad Credit

Just as a bad or ailing credit score is the result of a long period of shabby financial handling for one reason or other, you cannot use a ‘quick fix’ to just miraculously get rid of it. Money matters are serious issues and no sleight of hand can relinquish your low credit score just like that. You have to work on your finances for a long time to get your credit score back up to par, and even then you might not be able to borrow the way you would if your record was spotless to begin with.

Myth#3 – Credit Repair Companies Can Fix Your Credit Score for You

This is a variant of the “quick fix” myth and is more of a misconception.  Credit repair companies do exist, and the reputable ones do a good job of helping you fix your credit score. That is what this misconception misses: the companies help YOU fix your credit score. They do NOT do it for you. They are advisors and counselors and financial abettors, no more, no less. For some people, they can easily learn how to fix their bad credit and do it on their own. For others, there are credit repair companies.

Myth#4 – You Have Only One Credit Score

There are three main credit monitoring and reporting bureaus that keep track of your credit score: Equifax, Transunion, and Experian (plus Innovis in the US).  If you only had one credit score, there would be no need for three bureaus. These three organizations have similar methods of calculating your credit score, but have differences that set one apart from another. One bank or creditor might get reports from one of these three while another bank or creditor gets reports from another, though usually they check records of all three to get a better picture of your financial status.

Myth#5 – You Do Not Have to Worry About Credit Scores If You Do Not Use Credit

You can live without credit, but can you live without renting your apartment, applying for insurance, or getting a job? Your credit score is a reflection of your financial capabilities and responsibility in handling an important aspect of your life. Anyone (landlord, insurance company, potential employer) who needs to understand how you handle your finances for “permissible purposes” can get a copy of your credit report (at times with your permission) and base transaction decisions on that.

Myth#6 – Your Good Credit Offsets Bad Credit

Bad credit history will not look good just because you are currently successfully handling your finances well. Banks and financial organizations that check your credit report do so to see how much of a risk you bring to a business transaction. If there is still existing bad credit history on your report, your good history will not offset it, though your current good standing will make a significant impact on the overall decision. It might not seem fair, but there are many reasons you might have gotten bad credit before such as economic situations beyond your control. These factors must also be considered as possible risks.

Myth#7 – Some Items Last Forever in Your Credit Report

Foreclosures and bankruptcies have a huge impact on your credit score, but they will not reflect on credit reports forever.  Such items can last in reports for as long as 7 to 10 years – which is a very long time for bad credit to affect your finances – but they will be shed off after that allotted time to reflect new financial transactions of import. Since your good credit does not offset bad credit, clearing up this misconception should be good news for you: that lien or bankruptcy from years away will eventually wash off, and you can work towards making your report a clean slate until then.

Obviously, it is quite simple to make the erroneous assumption that if you do not use credit your credit score will not matter that much or that you have only one credit score. It is even just a figment of fairness to assume that good credit offsets bad credit. What is important is going through the effort of clearing up what is credit report myth and correcting misconceptions. After all, you can get problems with your credit if you continue to believe in these credit score myths.

Credit Reports and Divorce

Posted on by

No matter what your life circumstances, you should always have your own credit.  If you’re married, the relationship might end.  It can happen through divorce, whether friendly or unfriendly, or death.  If you don’t have your own credit history, life can be very difficult.

If you don’t have your own credit established and are considering divorce, get to your bank immediately.  This is the best place to start because you have some relationship with the bank even if you have never set foot in the building.  Take the opportunity to open accounts in your own name.  Open both a savings and checking account, and start saving every penny you can.  Your spouse can’t, legitimately, get any information about your account or even the fact it exists.

The next thing you need to do is apply for a credit card in your own name.  Your bank should offer one, and that is probably the best place to start establishing your own credit.  One you have taken care of these two issues, talk to your bank’s financial adviser and get any advice you can.

One thing you need to do is get copies of all your credit reports.  If you don’t know what a credit report is, you need to learn.  There are 3 credit bureaus:  Equifax, Experian, and TransUnion.  Each creates its own credit score, and one bad score can cause problems.  Each has its own way of presenting the information and calculating your credit score. You can obtain a free credit report from them once an year.

If you have already begun the divorce process, or the divorce is final, the problems can be more difficult.  You probably need to consider signing up with a company that lets you look at all three of your credit reports as often as you need to.  You need to keep up with all joint accounts until they are at a zero balance at which time you can remove your name from the account.

If your spouse has been ordered to pay on the accounts, keep a close eye on the status of each one by checking your credit files often.  In the event your spouse is cooperative, simply remove your name from any accounts you can, so the debt no longer appears on your credit report.

It will take some time to separate your credit life from that of your spouse’s.  Take the time to contact each credit reporting agency, and request that a consumer statement be put on the account that explains the fact there has been a divorce, and your spouse has been ordered by the court to pay the debt or debts if that is the case.

If you have debts that are your responsibility, do your best to take care of them.  You may cause your spouse harm by destroying his or her credit, but yours is going to suffer, as well.  It’s really not worth it.  A good credit score will serve you better than sticking it to your spouse.

It takes time but, in the end, if you persevere and do everything you need to do, your credit report will recover, and you will have your life back.

3 Major Credit Bureaus

Posted on by

In the United States, there are 3 major credit bureaus. There are TransUnion, Equifax, and Experian. These three credit reporting agencies are responsible for amassing information on an individual’s credit history. They collect data from a number of sources called data furbishers.

Data furbishers may be creditors like banks or credit card companies, lenders, utility companies, collection agencies, and courts. Creditors and lenders will give TransUnion, Equifax, and Experian information on how much a consumer has borrowed and on how long it takes them to pay back the loan. Creditors and lenders will give the credit bureaus monthly updates about whether or not the consumer has paid their monthly bill on time. Most of them, however, only tell the bureaus about a late payment if the borrower makes their payment more than 30 days after the due date.

Utility companies usually only notify the 3 credit bureaus if a consumer is seriously in arrears in their billing arrangement. For instance, if they have to place a lien on a property to get an electric or water bill paid, they may notify the bureaus. However, if the consumer is only a month late, they will typically not submit a report. Collection agencies notify the 3 credit bureaus if a consumer owes a bill that has been placed with their office. However, not all collection agencies report all of their debtors. In addition, if a consumer makes a payment arrangement with a collection agency, the agency will usually not provide TransUnion, Equifax, and Experian with monthly updates on the payment arrangement. They will simply notify them when the bill is paid in full or settled for less than the full balance. The courts notify the agencies about public records.

The 3 credit bureaus create reports on each consumer, and they provide these reports to lenders, landlords and some other interested parties. These are what we call credit reports. These parties will look at the consumer’s borrowing and repayment habits. Then, they will determine whether or not they wish to engage in a financial relationship with that consumer. In addition, these parties may also look at the consumer’s credit score. The score is derived from taking data from the credit report and plugging it into a special algorithm. Using their formula, the 3 credit bureaus work to create a credit score for most consumers. However, the credit score that most lenders and creditors look at is not the one created by the credit reporting agencies. It is the one created by FICO (Fair Isaac Corporation). They are an independent organization that creates these scores using information from all of the reporting agencies. You can obtain a free credit report once an year from the 3 bureaus, but you need to pay a fee to obtain your credit score. Whether that’s your credit score from the 3 credit agencies or from FICO, you usually have to pay a small fee.

To ensure that TransUnion, Equifax, and Experian are fair with consumers, they are regulated by two governmental bodies. The Federal Trade Commission provides oversight for the bureaus. The Office of the Comptroller of Currency oversees the entities that provide data to the bureaus, and they try to ensure that the data is correct.

If a consumer wishes to see their credit report, they can contact any one of the 3 credit bureaus. According to the federal law, TransUnion, Equifax, and Experian must all provide consumers with at least one free report per year. In some states, they must provide consumers with a report every time something negative is noted on their report.

Free Annual Credit Report

Posted on by

When consumers look for a free credit report, they often find many websites that offer a free report if the consumer signs-up for a free trial credit monitoring service. This is a legitimate way to get a free credit report. However, you will have to submit your credit card number, and once the free trial expires, the company will start to charge you for their credit monitoring service. It is possible to cancel the service before they start to charge your credit card. Ofcourse you can get an annual free credit report as an alternative.

According to the Federal government, the three credit reporting agencies must provide all consumers with a free annual credit report. These can be found at annualcrediterport.com which is the only website that is authorized by all three credit agencies to offer consumers their free annual credit reports. When a consumer visits this website, they will have to answer a few questions to verify their identity. For instance, they will have to enter their social security number, and then they may have to answer a couple of questions about their credit history. Typically, these questions have multiple choice answers, and they ask things like which street you lived on in the last four years, which bank gave you your car loan or other things. These questions help prevent fraud.

After you have entered your information, you will be directed to the websites for the three credit agencies. These are Experian, Equifax, and Transunion. Most of these reports contain no credit score. Thus, if consumers wish to get a credit score, they should anticipate spending a little bit of money. The most commonly used credit scores as those issued by FICO (Fair Isaac Corporation). They create a score by collecting data from all three of a consumer’s credit reports, and they then place this data into their special formula.OR you can opt for free trial offers from a credit monitoring service. You can see your credit score for free during the trial.

Consumers who do not like to order reports online can order their credit reports by calling 1-877-322-8228, or they can download a form from the Annual Credit Report website. This form should be filled out and mailed to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Consumers can order all three reports at the same time, or they can order a free annual credit report from each agency at different times in the year. If they opt to order one report every four months, they can monitor their credit over the course of a year, and they do not have to worry about signing up for a free trial credit monitring service. However, if a consumer opts to do this, they should be aware that not all three reports contain exactly the same information.

Getting a free annual credit report is easy for most consumers. However, most of these reports contain no credit score. Some states also require the agencies to notify consumers when potentially negative marks are added to their reports. They send a written letter to the consumer. The consumer can easily opt to return this letter and request a free report this way.