And in the conclusion of this study by Sallie Mae, How Undergraduate Students Use Credit Cards, they state: ”College students need access to financial options that combine financial education and parental involvement.”  This from their findings that  84 percent of college students said they were interested in pursuing some areas of education to increase financial literacy. 

In response to all of the above, and based on more than 7 years of credit consulting experience, I have developed a Credit Building Plan specifically for students and young adults.  For only $25, they get their own guide that covers proven steps that I used to help my own son build his credit when he turned 18 and includes lots of information about credit reports and credit scores.  It has basic info as well as the actual strategies that I use today with clients that need credit consulting services.  

Although the guide is designed for students ages 17 and older, parents and adults that have purchased this guide for their children or as gifts have found useful information for their own credit situations, too.  It also makes a great introduction to credit for younger teens.

NOTE: Recent and continuing changes to financial regulations have made getting credit without a cosigner a bit more challenging for people under 21.

Contact me, Dana, with any questions you may have, or leave a comment and I can address it here on the website. 

Your student Credit Building Plan can be emailed or mailed to you, whichever you prefer.  Click here to get yours now. 

NOTE: I also do credit education presentations at local high schools and colleges in the Tucson area as part of community outreach.

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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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A paid collection is a negative item.  Just because it has a zero balance does not mean it goes away or changes to a positive item.

WHAT TO DO
If you receive a collection call, tell them to put it in writing and give you debt validation.  DO NOT say yes or maybe to anything.  You really don’t know who you are talking to or if they are a legitimate company that legitimately owns the alleged debt.

If you receive a collection letter, request debt validation within 30 days of receiving the letter.  If you do not challenge it within 30 days, they can assume you agree with the collection and treat it as valid.

Go back to the original company for a statement of account history to determine how much, if any, you did actually owe.

Pay the original company if possible.

If you must pay a collection agency, negotiate for your credit rating along with negotiating how much you will pay.

This article has more information on what to do before you pay a collection.

Remember, paying off a negative item such as a collection account DOES NOT make it go away.  It can stay on your credit report for up to seven and a half years from the date of the original delinquency.  Read more about how long things stay on credit reports here.

Getting a credit check-up from Complete Credit Services gives you information on how to pay things off in a way that can help your credit, along with detailed strategies on the do’s and don’ts to help the five parts of your credit score.  This $100 investment can pay off in your financial future with higher credit scores, lower interest rates and even insurance rate savings.  Contact us today to get yours.

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You can estimate your own FICO score and find out what happens if  you pay down a credit card balance or miss a car payment.  You can check it out here.  Let us know what you think about it and how it worked for you. 

You can get your actual FICO scores with your credit reports here.  Contact us for the current discount codes to save money on your purchase.

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The short answer is they are both good practices.   Not only for building credit scores but also for limiting the amount of interest you pay.

Credit card balances under 25% of the credit limit are optimal for credit score growth.   Revolving account balances that are over half (50%) of the credit limit usually have a negative impact on credit scores. 
NOTE: Revolving accounts include major credit cards, retail store accounts, fuel cards and some lines of credit.

It is okay to have zero balance on revolving accounts.  A persistent myth is that you must carry a balance to help your credit score.  No you don’t.  You can pay off a credit card and then have the full amount of unused available credit sitting there on your credit file helping your credit score.   

NOTE: DON’T close the account when it is paid off. 

WHAT TO DO
For credit building , we typically recommend that the first goal is to pay down all revolving accounts to under 50% of the credit limit for each account.  This is, of course, as individual budgets will allow. 

The second goal is to pay down all revolving accounts to under 25% of each credit limit. 

The third goal would be to pay off all revolving accounts and use them ONLY as credit building tools.  See this article for more info. 

We offer a Credit Check-Up for $100 that gives detailed strategies to have a positive impact on all five parts of the credit score.  Contact us today to get yours.

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However, there are some things that consumers should be aware of, especially if they are planning a major purchase in the next year and need to have a certain credit score to qualify.

When you apply for any new credit account, it is a Hard Inquiry and counts against your score.  So simply applying for the no payments/no interest account at a store will count against you.  Getting qualified for the account will add a new trade line to your credit file; it will most likely be listed as a retail revolving account.  These accounts are often issued with a credit limit that is right at the purchase amount, so if you bought a total of $4500 of furniture, the credit limit on that new account may be $4500.  If you do a $2200 jewelry store purchase, the credit limit on the new account may be $2200.  With no payments for one year, the balance will not change and this account will consistently be reflected on your credit report as ‘maxed out’, meaning that the entire credit limit has been used.

Account balances are included in the second largest part of the credit score.  The difference between the credit limit on each account and that account’s balance is the utilization ratio.  When balances are over half of the credit limit, scores usually go down.  When balances reach the credit limit, scores can drop anywhere from 10 to 45 points. 

NOTE: Keeping account balances under 25% of the credit limit is optimal.

WHAT TO DO

Having this information and being aware of potential credit rating consequences of opening new accounts will help you make informed decisions.  Ask the company/store before you apply as to their general policy of granting credit accounts, is it just for the amount of the purchase, or do they give it in certain increments such as a $5000 account or a $10000 account.  Make sure there are no pre-payment penalties.  Determine what your payoff date will be to avoid the interest fees and then set aside some money each month as a ‘payment’ toward that account payoff, if you are not sending in actual payments for the account.

If you are looking to purchase a home in the next year, you may want to reconsider that furniture purchase until after you have closed on the house.  This article has more credit tips for home buyers.

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We hear from many people who are experiencing reduced credit limits on their credit accounts, even though they have been good, long-standing customers with a stellar payment history.  This will likely continue as the financial industry and the credit card companies look for ways to reduce their risk for loss.

Some people are receiving notification that their credit card account is being close due to inactivity.  This happens if the account has not been used in a while; the credit card company might decide to close it rather than risk the customer using all of the available credit and then being unable to repay it.

WHAT TO DO
Use your credit accounts as credit building tools.  Keep your revolving accounts: major credit cards, retail store and gasoline accounts, active by using them once every three months, IF they do not currently have a balance on them.

NOTE: This does not mean that you should go out and charge big ticket items and use up your credit card limit.

HOW TO DO IT
Use your card for a small purchase of something you were going to buy anyway, perhaps a tank of gas or a pair of pants.  When the credit card bill comes the following month, pay it in full early, before the due date.  This should keep it reported as active and open on your credit reports where it will be included in your Utilization Ratio.  BONUS: You won’t pay any finance charges or interest fees by paying the account in full before the due date.

MAKE A DATE

Mark your calendar or planner to schedule regular use of the cards as CREDIT BUILDING TOOLS.  Remember, this strategy is only to help grow your scores, NOT to increase your credit card debt.  By keeping your credit accounts active, they remain open on your credit file, helping your credit scores grow.

You can get more details on this and other credit building strategies, specifically tailored to your accounts, with your Credit Check Up.

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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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Credit Report Monitoring is an important part of Personal Financial Fitness and it’s easy to do.  To get a copy of your own credit report from one, two or all three of the credit bureaus, go to annualcreditreport.com.   This is the place to get the actual free reports that consumers are entitled to by law.  There is no charge and nothing to sign up for.   This article has more information on credit monitoring.

REMEMBER: If you are asked for your credit card number, it is NOT your free annual report.

If you want to know your current FICO scores, you can obtain two of them, along with the corresponding credit reports for about $16 each.  Click here and look for FICO Standard on the right side under the orange “My FICO Products”.  You can contact us for possible discounts available on FICO scores and reports.

NOTE: Most of the credit scores that are advertised to consumers are not FICO scores, which are the ones that most lenders use.  Spending your money on any other scores will not give you a fair comparison to what the financial industry uses.

With both of these options your reports will be available to you online for 30 days when you set up log-in information.  And checking your credit reports in either of these two ways does NOT count against your credit score as a Hard Inquiry.

When reviewing your credit report, look for unknown accounts, unusual or incorrect balances on your existing accounts, inquiries that you don’t recognize, 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.  Mark your calendar or planner for four months later to schedule your next credit report monitoring.

For a better understanding your credit report and to get effective strategies to grow your scores, contact us today for your Credit Check-Up.

However, we see numerous credit reports with collections and judgments stemming from past rentals the consumer had.  With the increasing emphasis on credit scores in our society, including rental and employment applications, as well as home and auto loans, it is important for people to take every step possible to protect and build their good credit.  Check out and use these tips from a previous article on our site:

What To Do When Leaving a Rental Property:
1) Take pictures (with date stamps) of the empty house or apartment during the final walkthrough with the landlord.
2) The final receipt showing your last payment should state “Paid in full as agreed, zero balance due.”
3) If leaving the lease early, and someone from the management company says there will be no penalty, no fees and no further money due, get all of that in writing with an employee signature and a date on it.
4) Do not leave the keys with someone else to turn in for you.  Do everything in the official exit process yourself.  Until you have your signed exit papers, you are not free and clear.
5) Request a specific date for your deposit to be returned by.  Leave a forwarding address for your deposit to be mailed to.  If necessary, set an appointment, in writing, to go back and get your security deposit.
 

What To Do Before Renting:
1) Get a copy of your credit report to assure complete accuracy and no surprises.
2) Read the entire lease agreement, even the small print.  Remember – no surprises.
3) Request a clause in the lease allowing for early termination with no penalty in the event of job transfer or reduction, medical issues, home purchase or other possible events that may be applicable.
4) If something is explained verbally that differs from the lease, get it in writing from the landlord, with date and signature.
5) Any payments in cash should have a detailed cash receipt; keep a copy of all cash receipts.

You can read this article from June 2009 for more information.  The most important thing to remember for any financial transaction is to GET IT IN WRITING and then keep a copy of that written document.

A Credit Check-Up from Complete Credit Services can provide specific details on how to build your credit scores based on your current information and accounts.  This may be the year to stop renting and become a home owner.  Your good credit can make that happen.

NOTE:  All of the above is for credit building information and personal reference only and should not be taken as legal advice.  Seek legal counsel with specific questions pertaining to leases and landlord/tenant law in your city and state. 

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