Lenders who have extended credit to you report your account information to the three major credit bureaus, Experian, Equifax and TransUnion.  This includes what types of credit you use, the length of time your accounts have been open, and whether you’ve paid your bills on time.  They also report how much credit you’ve used and how often you apply for new credit accounts. 

So there are thousands of companies reporting information about millions of consumers.  That’s a lot of data to input and transmit each and every month.  And most of it starts out with people – people who fill out credit or loan applications and people who process those applications.

There are four reasons that credit report errors typically happen. 

1) A consumer applied for credit under different names.  Example: Robert Jones, Bob Jones, etc.

2) There was a clerical error in reading or entering name or address information from a hand-written application.

3) A social security number was misread or transposed by the lender or given incorrectly by the consumer.

4) Loan or credit card payments were inadvertently applied to the wrong account.

Yes, all of these things really do happen.  As a Credit Consultant, I’ve seen credit reports with four different social security numbers listed for one person.  One client had the same name as someone else who went to the same hospital he did and that other person did not give their social security number so my client got all the other guy’s bills.  We’re talking over $20,000 worth of medical collections on his credit report that did not belong to him!

WHAT TO DO
Check your own credit report for errors.  You can do this at NO cost and checking your own credit does not count against your scores.

NOTE: The TV and Internet commercials for free credit report.com are NOT the place to go for NO COST credit reports.  You get a ‘free’ credit report when you enroll in their services.  This video from the Federal Trade Commission (FTC) has good info.

Look for unknown accounts on your credit file, unusual or incorrect balances on your existing accounts, inquiries for new credit that you do not recognize, and of course, incorrect names and social security numbers.

Report the errors to all three credit bureaus, even if you only review one of your three reports.  The FTC provides a sample dispute letter and info on credit report errors.   This article on our website also provides tips for disputing  information with the credit bureaus.

Yes, errors happen on credit reports.  It doesn’t mean that you’re stuck with them.  The investment of your time to review and correct your own reports can pay off with good credit and higher scores in your financial future.

For a comprehensive Credit Analysis for only $100, contact us today.  You’ll receive effective strategies to build your credit using each of the five parts of the FICO score.

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Most credit monitoring services issue alerts when there is a new inquiry on your credit report.   This can be helpful to catch a potential fraud activity if you get an alert that Sears just had an inquiry for your credit when you know you have not applied for credit at Sears. 

However, credit monitoring does NOT do anything about existing errors on credit reports.  If there was a fraudulent account on your credit file and you sign up for credit monitoring and never look at your full credit reports, the fraud could continue until who-knows-when.  Additionally, some credit monitoring services only check one or two of the three major credit bureaus.  To do true monitoring, you want a service that covers all three bureaus as not every financial company pulls your credit (creating an inquiry) from all three bureaus.  If you’re only monitoring one bureau, and fraudulent accounts are being opened at companies that check one of the other two bureaus’ reports, you won’t know about it.

WHAT TO DO
> Check your own credit reports regularly.  You can do this at no cost.   See #10 on this Identity Theft Prevention list.  Do this BEFORE signing up for monitoring services and continue to do so regularly throughout the year.  Each consumer in America gets at least three no-cost reports each year.  You can check one of them every four months for continuous credit monitoring.

> When reviewing your credit report, look for unknown accounts; unusual or incorrect balances on your existing accounts; inquiries that you don’t recognize; and extra social security numbers or names that don’t belong to you.  Contact all three credit bureaus to correct the errors, even if you only review one of your reports.  By law, they must investigate the items you dispute and reply within 45 days.

> Read the fine print in any credit monitoring agreement before you sign up, including their cancellation policy and process.  The Identity Theft Resource Center has a great information sheet on this topic.

> Remember that most lenders in the U.S. use FICO scores for their credit and loan approval process.   Some monitoring services include a ‘credit score’ with your service.  If it is not a FICO score, it is not an apples-to-apples comparison to what a lender will be looking at. 

Yes, we’re all busy these days.  And we want fewer things to keep track of and worry about.  This is a friendly reminder against complacency.  Signing up for a monitoring service means you have a TOOL to assist you in your credit building and protection efforts.  Stay on top of it by staying tuned into it.

You can get a Credit Check-Up that gives you an analysis of your current credit situation as well as strategies to build your credit for only $100.  Contact us today to order yours.

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When you go to purchase a cell phone and sign up for a contract, the company is most likely going to check your credit before they give it to you.  When they ask for your full name, birth date and social security number, it’s probably for a credit check.  Then they either approve or deny your request for service with them.

Every time you authorize any company to check your credit, you will get a Hard Inquiry on your credit report.  This will count against your scores, whether you get approved or not. 

Most utility companies, including cell phone companies, do not pay to ’subscribe’ to the credit bureaus, so they do not do a monthly report to the bureaus for all of their customers.  So the cell phone bill you pay each month does not show up on your credit file.

NOTE:  If you stop paying your cell phone bill or cancel the service while you are still under contract with them, they will probably send your account to a collection agency and THEN it will most likely show up on your credit report.  And any collection item on your credit is negative and will hurt your scores.

WHAT TO DO
Limit the number of times you apply for credit.  This includes saying okay to the checkout clerk that asks if you want to save 10 or 15% today by applying for their store card.  Just Say No.

Always pay all of your bills on time.  Payment History is the number one factor in FICO scores.

If you cancel your cell phone service, and they say there will not be any other charges, GET IT IN WRITING!  You must have some protection for yourself other than “somebody from your company told me that it would be okay”.

Check your credit report regularly to make sure there are no errors or surprise negative items showing up.  You can get them at no cost here.  You actually get three per year – one from each of the credit bureaus.

You can contact us to order your credit check up for only $100.  We’ll do a thorough review of your report and give you information on how to positively impact all five parts of your credit scores. 

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Remember, your truly FREE reports are at annualcreditreport.com.  You are entitled to three per year at no cost; that is one from each of the three credit bureaus.  They’ll all try to sell you something on the way to getting your free report, even through the official government mandated website.  Just click on the NO or NO THANKS button and continue on your way.

If you do decide to sign up for anything when you’re online, read the fine print.  If you have questions, email or call the company for clarification and ask where on their site that information is so you have a copy in writing. 

When you give a credit card number for any automatic billing, ask about the cancellation procedure.  We have had many clients with recurring automatic billing that they have attempted to cancel and are still being charged for. 

When you do contact the company to cancel a recurring charge, get written confirmation that the automatic billing will be stopped and be sure the date of the cancellation is clearly stated.  And then keep the paper!  

Read your account statements and monitor your credit report regularly to be sure that you are not losing money or paying extra for something you really don’t want, need or have previously cancelled.

Contact us for information on getting your Credit Check Up to learn how to build better credit scores.

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The two sites being advertised the heaviest right now are the freescore and freecreditreport websites.   Experian, one of the three major credit bureaus, owns the company advertising the free credit reports.  The free score site is a subsidiary of Vertrue Inc., which this Wall Street Journal article states has had numerous consumer complaints with the Better Business Bureau.

Neither of them offer FICO scores, which is the scoring formula that the majority of lenders use.

And neither of them are FREE!  You get the ‘free score’ or ‘free reports’ after enrolling with… or signing up for….. 

Remember, if you have to give credit card information to get something, IT ISN’T FREE.

WHAT TO DO

For much less than the several hundred dollars per year they charge, you can check your own reports.   Go to www.annualcreditreport.com to get the no-cost reports you’re entitled to each year.  Because we all get three of them, one from each bureau, you can monitor them throughout the year by checking a different one every four months.  Couples with shared accounts can utilize their combined 6 reports each year to check a different one every two months for year-round, effective monitoring. 

Look for accounts you don’t recognize, balances on closed accounts, late payments on accounts that were never late, unknown addresses, incorrect birthdays and social security numbers, and misspelled names.  This article has information on how to request correction of the errors you find.

To get your scores, we strongly recommend that you only pay for FICO scores.  Any other scores are not an apples-to-apples comparison close to the scores that lenders use.  You can go right to the FICO source to get your TransUnion and Equifax FICO scores, with the credit reports, by clicking here.  They are $16 each and you can contact us for current discounts.

NOTE: In February 2009, Experian took away the consumers’ right to get their own Experian FICO score.

Some people have their friend or relative in the banking or mortgage industry get their credit report with scores for them.  This does show actual FICO scores, and they are the exact ones that lender uses.  However, having a company obtain your credit report will result in a Hard Inquiry that counts against your scores.  Checking your own reports and scores is a Soft Inquiry and does not count against you.

SUMMARY
The companies that advertise “free” scores and/or reports, are counting on most people signing up and then NOT canceling their subscription before the trial period ends.  It may be 3, 4, or even 6 months before someone decides they are not using the service and want out.  By then, the company made some money and the consumer spent some on a product they may not have used or even understood.

Be very careful when enrolling in any of these “free” services.  Be sure you read all of the fine print, be sure you have an exit strategy in mind going into it, and mark your calendar or planner with the date you intend to cancel.

It DOES pay to learn about your credit and your scores.  However, you don’t have to pay to just to see your credit report.  And you can pay a lot less than $30 a month to get your true FICO scores.

Thanks, David, for a great question.

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Common misconceptions about credit scores and loan qualifications include:

-Only one score is used when applying for a loan.

-The three credit scores are averaged to get your lending score.

-The highest score is used for loan approval.

-The lowest score is used for loan approval. 

The answer is NO, not usually are any of these the case.  Some companies may only check one of your scores, however, typically all three are checked for a major credit purchase such as a mortgage.

When you apply for a mortgage, your lender will almost always look at all three of your credit scores.  The middle score, or Mid Score, is the one that mortgage lenders use to determine credit score eligibility.  If you only have two scores, they will almost always take the lower of the two to use for loan decisions.

If all three of your scores are above the required minimum needed for loan approval, that’s great.  If one score is much higher than the other two, and those two are below the minimum required, it can be an obstacle as you go through the lending process.

WHAT TO DO

Check your own credit scores.  Make sure you are getting FICO scores, the ones that the majority of lenders use.  All the other scores that are heavily advertised and promoted on TV and online are NOT the same as FICO scores.  At this time, consumers can only access two of their three FICO scores themselves.  The good news is that checking your own reports and scores does not count against you as it is considered a Soft Inquiry.  Contact us for current discounts on FICO reports and scores.

You can also get a copy of the three credit scores when you apply for a mortgage.  The lender will check, or pull, your credit file and is required to give you the Score Disclosure Page with your scores on it.  Anytime you apply for any loan, it is a Hard Inquiry and counts against your score.

The best thing to do is to be sure that everything on all three of your credit reports is accurate.  About 79% of credit reports have errors on them and those errors often have a negative impact on scores.   Get your own reports here.   Read this article for information on how to dispute the errors you find.  For an in-depth analysis of your credit reports, contact us today for a Credit Check-up.  It may be the best $100 you ever spent.

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A Consumer Statement is something that can be added to a person’s credit report, by them.  It is about the only thing a person can add to their own report.  Everything else on there comes from companies that pay the credit bureaus as a “subscriber”, allowing them to put their customers’ account information on the credit bureau reports, and it also comes from public records searches that the credit bureaus initiate themselves.

The Fair Credit Reporting Act (FCRA) states “…that the consumer has the right to add a statement to the consumer’s file disputing the accuracy or completement of the information;”.  The credit bureaus will gladly insert this and it does indeed show up on your credit report.

However, it is NOT included in the credit scoring formula.  It has nothing to do with your credit scores.  It will not help your credit rating at all.  It may even stay on your credit report long after the item that the statement is about is gone from the report.

Most lenders check credit reports for minimum score qualifications, then they may look for items that their own company considers a “red flag” in the lending process.  Rarely do they actually look over the entire credit report, let alone see the words of explanation in the Consumer Statement. 

WHAT TO DO
Don’t bother with a Consumer Statement on your credit report.  As logical, reasonable people, we want to explain the valid circumstances for something that may be on our credit report.  The credit bureaus are not logical, reasonable people.  Remember, they make money whether your information is accurate or not, whether there were legitimate reasons that caused something, and whether or not you try to explain it.

If you know something in your credit file is not correct, keep trying to get it corrected.  You can contact the original company for documentation, request validation from  collection agencies related to the account, and check your own records for paperwork to support your claim. 

Be sure to send in some new documents or reasons when you contact the credit bureaus so that they do not determine that your dispute is “frivolous”, which gives them a reason to stop investigating the matter and leave it as it is. Yes, this is really written into the FCRA, conveniently providing an out for the credit reporting agencies. 

Learn how to positively impact your credit scores.  There are five parts to the FICO score.  Our Credit Check-Up provides our clients with a complete analysis of their current credit report and effective strategies they can use to help their credit scores grow.  Contact us today to get yours.

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NOTE:  Any time you are asked to give a credit card number to get something free, it is not free.

The Fair Credit Reporting Act (FCRA) allows consumers to obtain three credit reports each year, at no cost; one from each of the three major credit bureaus.  We recommend that everyone check one of their three free reports every four months to effectively monitor your credit throughout the year.

When you find errors on your credit reports and notify the credit bureaus in writing that these items are not correct, they have thirty (30) days, per the FCRA, to respond. Be aware that the credit bureau replies, which include a complete or abbreviated version of your updated credit report, WILL NOT BE FORWARDED.

If you move within a month or so of writing to the credit bureaus, you should notify them via mail or online that you have a different address. Otherwise, you may not receive the updated information about your credit file. OR someone else who now lives at your old address has access to your personal and financial information when your credit report is delivered to that old address.

WHAT TO DO:

Keep track of the dates you contact the credit bureaus to be sure that they do their job in a timely manner as required by law.

Allow for mailing time and mark your calendar for the date by which you should receive the credit bureau replies.  We suggest 6 weeks from when you first mailed your correction request to them.  If you do not receive them by that date, contact the credit bureau immediately to make sure that your information is safe.

Learn about your credit report and scores with a Credit Check-up from us.  For only $100, you get a complete analysis of your current credit report with strategies to make a positive impact on all five parts of your credit scores.  Contact us today to get yours.

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You decide to get your scores a few months before you go in for that loan application.

You find out some of the items on one credit report are not on the others AND none of your credit scores are the same as the ones from the other credit bureaus.

WHY??

Well, you are absolutely right – it makes no sense.  You pay all your bills on time to each of your creditors, why are there three different reports and scores?

The three credit bureaus are independent, for-profit, companies.  They are not government agencies.  They charge their ’subscribers’, companies with consumer accounts, to report their customers’ information each month.  By the way, there is no law mandating that companies report our account information; the entire credit reporting and scoring system is voluntary and was developed by the financial industry for their own purposes.

Each of the credit bureaus then has their own scoring formula(s).  They each have a version of the FICO scoring system because that is the one most lenders request for their lending decisions.  And they each have their own proprietary score that they can sell to consumers as an additional revenue stream.  These are called “educational scores” by the credit bureaus because they are NOT lending scores.

The credit score is calculated based on the information in the credit file of each consumer at the moment the score is calculated.  So if you have a perfect payment history up until right now, your credit score will reflect that.  If you skip a car payment next month, the lender reports it to the credit bureau, and then you check your score two months from now, it’s probably going to be quite a bit lower because the information on your report has changed.

Sometimes, smaller or local companies do not pay all three credit bureaus to report, so the account you have with them may only show up on one or two of your reports, which can cause a difference in your scores.

Collection accounts are often only on one or two of the credit reports.  Public records may not be on all three, either.  And then of course, there is human error.  If somebody transposes one digit of your social security number or birth date, it can lead to mixed identity and crossed credit files.

WHAT TO DO
Check your credit reports regularly.  You can catch errors before they lead to more complicated problems and tangled accounts.

Send correction letters to all three credit bureaus when you find errors.  Even you’ve only seen it on one of them, write to all three.  This article has tips on disputing inaccuracies.

Make sure that your accounts are reporting on all three of your reports.  For credit accounts with major, national lenders, they are usually on all three.  If not, contact the creditor and request that your account be reported to the bureau(s) that don’t have it on there.

Request your score disclosure page from your mortgage lender.  They are required to give you your three credit scores that they used while considering your application.  If one of the three is significantly less than the others, it may be an indicator of mixed identity or other major errors on that bureau’s credit file they have on you.

Lastly, keep in mind that lenders often look at your middle, or “mid” score to determine loan eligibility.  If all of your scores are above their required minimum, the few points difference among them probably doesn’t matter much for your financial well being.

It is very common for identity theft and fraud to occur under the name of a deceased person.  It can cause havoc to the person’s estate and can become a true financial burden and hardship for the remaining family members. 

The Identity Theft Resource Center has a comprehensive checklist, complete with sample letters, to notify the credit bureaus and other agencies.  We suggest that this page be printed out and included with the other estate planning papers that each person has. 

It is important to note that anyone, of any age, that is dies may be a target of identity theft; even infants.

Some highlights from the checklist include:

Get 12 copies of the original death certificate, not just one.  Most places want an original, not just a photo copy because so many things are available as public records and they want to assure authenticity.

Request that any financial account that is being closed be labeled as “Closed. Account holder is deceased.”  Get written confirmation that this is being done.

Notify all three credit bureaus and request an alert of: “Deceased. Do not issue credit.”   Request a copy of their credit report from each credit bureau.  This will provide a clear picture of their credit file right after their death and can be used, if needed, for future proof of fraudulent activity on their accounts.

We know this is not a pleasant subject and certainly one most of us don’t want to think about.  These suggestions are made in the spirit of taking some precautions and time now to reduce the amount of tasks to think about later, allowing families and loved ones to focus on the memories of their beloved, rather than worry about financial details.