Tracy Becker asked:




Credit Monitoring – How does it protect you from identity theft and what service does it really offer?

We have been asked over the past 5 years if Credit Monitoring is worth having and if we can provide this service.

Credit Monitoring is a huge business and with scores being so important it will continue to grow. How many times have you seen promotional offers for the opportunity to get free monitoring of your credit profile? It is so confusing for most to even understand their credit reports let alone what the monitoring services provide and how they can help. The information given by these services is difficult to decipher and can sometimes do more to confuse and scare consumers than help them.

I have been studying these services and learning about them for many years now. The one question I have is how can finding out you are a victim of identity theft or credit card fraud protect you? Once you know you are a victim it is already too late. When you begin to see signs of identity theft on your credit report the damage has already been done. Logically expecting Credit Monitoring to protect you from identity theft would be like studying for an exam after you fail. Identity theft is a process and the last result of it is seeing accounts on your credit report that do not belong to you. These accounts are usually in default with late payments or have gone to the point of collection or charge off.

Collections – are accounts that have not been paid at all and have been sent by the original creditor to a third party collection agency or the collection department of the creditor. Collection agencies may be lent the debt for a commission and if they are successful in collecting funds from the debtor they earn that commission. Other collection agencies buy the debt from the creditor for a reduced amount and they become full owner of whatever is collected. Once you understand this you can also see why they are so aggressive about getting consumers to make payments.

Charge offs- are when creditors write the amount the consumer owes, that has been uncollectable, off as a loss against their profits. This does not mean the consumer no longer owes the money.

So how can credit monitoring stop identity theft? The answer is it can’t. The only thing credit monitoring can do in regards to identity theft is to tell you that it is occurring. Another problem is many consumers buy credit monitoring because they are too busy to learn about their credit or just don’t want the responsibility of understanding it. They think that paying a company to monitor their credit will insure them against any problems. In many cases when the monitoring company alerts them to a new collection or charge off if they don’t recognize the account they just shrug it off as an error and don’t investigate the occurrence until they have a problem getting financing. The lesson is even when having credit monitoring you need to understand, at least, the basics of credit to recognize what is a cause for concern.

We are consistently approached by consumers with this question “I had an alert from my monitoring company. What does this mean?”. Credit monitoring companies provide basic updates to you about changes in your credit. Depending on the company hired and the specific program they offer will determine how you are updated and what information they will give you. Some companies only provide you with info about 1 credit reporting agency. Since there are 3 credit reporting agencies Trans Union, Experian, and Equifax this is just a piece of the information needed to really monitor your credit profile. One of the risks you take when hiring a monitoring service, that provides you with only one report update, is not being able to see if a collection is reported on all bureaus. Many smaller creditor’s like Verizon,Doctors,Dentists, and Health Clubs don’t want to pay the credit reporting agencies to provide each credit profile with this collection info since they will have to pay 3 times for this service. The result is they typically pay one reporting agency instead of all three and only put the collection on that one credit report. If you have picked the report that isn’t updated you will not be aware of this problem until all three reports are pulled. In this case the whole point of monitoring your credit will be lost.

When a monitoring service only alerts you that a change has occurred and does not tell you what the details of the change are we find consumers in a panic. They now know there is a change but don’t have any idea what changed. You can be updated of an alert when a 3rd party pulls your credit profile if you are shopping for a car, home, or business loan. You may be updated with an alert when you open or close an account or have a new late payment. Alerts come when balances change as well. If you don’t have details on what the alert is you will be in a continual state of panic. Credit is not stagnant and with so many changes happening daily these alerts could come all the time, daily, weekly, or monthly depending on how active your credit profile is. You can see there is much homework to do when deciding on a monitoring service. If you are highly educated about your credit and monitoring services it could be helpful for keeping you aware of the general picture of your credit portfolio. If you are uneducated or don’t have the time to keep track of your current credit situation it could be a source of continual anxiety and frustration.

Education is the key to staying updated on your credit and its significance to your financial life. There are other ways to protect yourself against identity theft and credit card fraud and we will address them in this 2 part series.

Karen

Cornie Herring asked:




Bankruptcy often is the last ultimate solution for many debtors who have unbearable debts. With filing a bankruptcy, you will get rid of your debts instantly and relief you from the harassing call of your creditors.

Although bankruptcy has many undesirable consequences such as your bad credit record will remain on your credit report for 7-10 years, but with a little work, you can improve your credit even before these negative records expire. Here are five easy steps you can take to rebuild your credit.

Step 1: Get to know your current credit status

The first step to rebuilding your credit is to look at exactly where you stand. Order all your three credit reports from those three national credit bureaus: TransUnion, Equifax, and Experian. You can order these reports online, it easy and secure.

Print each report and review it closely. Try to understand the information listed in your credit reports and highlight any negative records or inaccuracies that are damaging your credit score.

Step 2: Check the expiration dates

By law, your bad credit record will remain in your credit report for 7 to 10 years, but the exact expiry date might be different among these 3 reports. Your bad record will still remain at your credit report although you have pay off your old debts and discharge from bankruptcy.

Look up the exact date of each of bad records including judgments, liens, charge-offs, late payments, bankruptcy filings, and collection records. You will likely see a major improvement in your credit score when these records expire.

Step 3: Request For Correct On Any Inaccurate Records

If you find inaccurate records, fraudulent accounts, or records that should have expired on you credit reports, you have the right to send a separate dispute letter to each of the credit bureaus to correct your Equifax, Experian, and TransUnion records. The bureaus will initial a 30 days investigation to see whether your requests are valid and if so, they will correct the inaccuracy in your credit report.

Just one note, don’t try to dispute any of the positive information listed in your credit reports and it is a waste of time to attempt to dispute these records. Disputing positive information may actually harm your credit scores.

Step 4: Start to create good credits

Since there is no way to remove your bad record from your credit report, the best way to improve your credit score is to add good credits and building up your credit from there. You can easy do this by open up a new credit card from banks like Orchard Bank (Orchard bank has credit card plan designed specially to help people rebuild their credit after bankruptcy).

Use this new credit card responsibly and make the monthly payment timely; with this you are building new history of good credit behavior on your credit report. Over time, you may want to open additional credit card accounts or obtain a loan to boost your credit score even higher.

Step 5: Monitor your progress

Subscribe to a credit card monitoring service or get a credit card monitoring software and use it to track your credit score progress closely. Your credit score should improve steadily as you continue to use credit responsibly and add new positive information to your credit reports.

Summary

Bankruptcy does not need to chain you to bad credit for the next seven to ten years, but you have to be proactive in order to recover and rebuild your credit.

Leo

Roger Passman asked:




In my work I speak to many people that have unrealistic, almost grandiose, ideas about repairing their credit. My response to the person whose expectations exceed the limits of the possible is to send them to someone else. One of the factors contributing to damaged credit in the first instance is that attention is not paid to the possible allowing grandiose ideas to stand in the way of sound financial planning.

When working to repair one’s credit there are three factors that must be considered. First, is the item you would like removed from your credit report legitimate? If it is it will generally stay a part of your report until time takes care of the item. Secondly, how old is the item you would like removed? The further away from the present the item is the less it impacts your FICO score. Finally, what has your credit history been in the past 12 to 18 months? If potential creditors see a pattern of on time payments and sound financial practices, it is more likely that they will offer additional or new credit even if your score remains somewhat damaged.

Credit repair consists of two important stages, both of which mirror the concerns mentioned above. The first stage is to work to remove inaccurate or mistaken information from one’s credit report that have an adverse impact on one’s credit score. Some items may look bad but have little effect on one’s overall score. A tax lien, for example, that has been discharged may continue to appear on one’s credit report for up to ten-years and, under some circumstances, even longer. But that discharged lien has a low impact on one’s overall score and may not be worth the effort to try and remove it. A pattern of late payments, on the other hand, may have a high impact on one’s score and may well be worth the effort to remove or re-age if removal is impossible.

The second stage in credit repair is to make sure that from the moment one begins to actively repair one’s credit that no additional adverse be recorded on the credit report. Not only does that defeat the purpose of the credit repair effort, it sends up red flags for the credit bureaus to not take your repair efforts seriously. That is the last thing one wants when working to restore one’s credit score to acceptable numbers. This stage requires a change in lifestyle, as one must relearn sound fiscal habits that will assure no additional adverse information be recorded by the credit bureaus.

Effective credit repair seeks to eliminate inaccurate, mistaken and unverifiable adverse information from one’s credit report. It cannot remove items that are legitimate, verifiable and true. To claim otherwise is unethical and may even be illegal.

Victor

Chane Steiner asked:


The search for credit repair help can be a little scary at times. There are so many factors that come together to lower your score that it can be confusing as well. Your exact situation will always be just a little different from anyone else’s; you need to evaluate it carefully. Once you’re able to see exactly what’s wrong, you can start researching how to fix it.

Many services offer to help consumers: credit repair services, counseling services, debt consolidation, and even friends and family. There are so many it’s hard to pick the right one: who’s right for you? This depends on your exact situation as well. Some of these offered services can help and hurt at the same time: credit counseling often lowers debt but also harms your actual credit score.

Keeping your used-credit to under 30% of your available credit is a major part of a high score. For a lucky few, all they need to do to raise that score is to pay their debt down. The best way to pay debt down is to create a budget, live well below your income, and consider taking on a second job. Do your best to avoid paying high interest fees for late payments on your credit accounts. Transferring high-interest amounts to low-interest accounts is another way to pay them off faster.

If your problem is negative items on credit report, you may need to resort to credit repair. That repair happens through disputes filed with the credit bureaus in an effort to remove the negative items. Once you send a dispute form to the bureau, it has 30 to 45 days to find verification of the information. It’s also possible to dispute public records: judgments, foreclosures, tax liens, repossessions and bankruptcies are all fair game.

In addition to the dispute letter to the credit bureau, you should also send a debt validation letter directly to the creditors of any debt on your record. This request must be in writing, and they have 30 days to reply. If they fail to reply, or can’t come up with accurate documentation showing your debt, law requires them to delete the account from your credit report.

If the creditor is able to validate the debt, and if the bureau doesn’t remove it from your report for lack of verification, you don’t have many options left. One of them is to contact the creditor directly and negotiate with them. Some creditors may be willing to delete the account from your report if you’re willing to pay the account in full or in part.

A smart consumer always knows the status of his or her credit score before trying for a new credit account. If you apply for an account, but you know you have little chance of approval, you’re harming your score even more. It’s a good idea to sign up for a credit monitoring service, so you can stay aware at all times of your score and report.



Lloyd

jorge05r asked:


I opened a new credit card account 07/2005 with MACYS, 09/2005 I stopped paying and now that Im monitoring my credit score I see it’s status which is (120 days late, Late by 4 payments)

My question is, Should I pay off that account, would it fix my score, make it worse, no difference, is it worth it?

Wanda

Marc Gaines asked:


Modern technological innovations have given us the convenience to purchase everything from the comfort of our homes. With the help of the Internet and credit cards we can buy our desired products and services from anywhere in the world without physically visiting the showroom or even making the cash payment. However, along with adding comforts to our shopping and many other benefits online transactions though credit cards might also bring troubles that are enough to take away your peaceful sleep! One of the most prevalent problems that credit cards users often face is identity theft, which is a new mode to duping without the knowledge of the victim.

Identity theft means stealing personal information of a person and impersonating him or her for making frauds. Phishing and hacking are some of the common means used for identity thefts involving credit cards. Your credit card number or social security number can be misappropriated by unauthorized persons and misused to cheat banks by fraudulently getting loans, making online purchases, or taking money from the ATM and it is obvious that you will be held responsible for all the transactions being made from your account. IDTheftDefense provides you with A to Z information on identity thefts, the ways of detecting and preventing identity theft, credit reports and a lot more.

Credit monitoring or credit “file” monitoring is an easy, efficient and affordable way to identify theft detection. You can even prevent identity theft by detecting mistakes in your credit report and correct them using credit monitoring services. Credit report, also known as credit history in many countries, provides detailed records of how much a person or company has borrowed and repaid in the past including information on late payments and bankruptcy. A credit score represents your creditworthiness based on the information collected from your credit report.

You can successfully monitor your credit report by using efficient credit monitoring services:

1. First of all, you can check credit report and make relevant inquiries into your credit line.

2. By reviewing your credit report you can easily identify if any new account has been activated using your identity.

3. Address changes on credit information and collection activities in your name can be easily detected from credit reports or credit histories.

4. Your credit report will reflect delinquencies or any negative change made to your account as well as information on closed accounts.

Though credit monitoring is an important step towards ID theft defense, it cannot be used to prevent them. Awareness is the key to check identity thefts. As an informed individual you can easily detect identity thefts or take appropriate steps regarding any mistake in your credit report. Thus, you can lessen the amount of financial or credit rating damage which results from the false or negative activity on the report. Credit monitoring will keep you informed and definitely lower your risks in case of frauds resulting from identity thefts.

You should go for the credit monitoring scheme that suits your needs. Opting for monthly status reports through email is a viable option. IDTheftDefense recommends the 3-in-1 credit report which includes the three credit bureaus – Equifax, Experian, and TransUnion, as you may not come to know about all the credit problems if your monitoring plan covers only one credit bureau. If you want to protect yourself and your family members from identity theft, then it is essential for you to educate yourself about it by getting all information from the IDTheftDefense site.



Esther

Mike Clover asked:


Credit Score being the doorway to financial health I thought I would give some tips on what to avoid so your credit score is not affected. If your credit score is currently low I guarantee that you are paying too much to your creditors. Any business that is in business for profit is looking for a reason to make money. If a creditor knows your credit scores are low they will charge you for it. The reason is because they can. Here is what to avoid so your creditworthiness is not affected.

Late Payments

This is one credit dink I see all the time. If you are late on a obligation that reports to the credit bureaus I assure you that your score will drop around 75 to 100 points. Timely payments account for 35% of your overall FICO score. This particular factor in your credit score is the biggest factor of all.

Amounted Owed

If you have credit card debt, and the balanced owed vs. the allowed credit limit is more than 30%, your score is affected. The amount owed accounts for 30% of your overall FICO score. You should keep your credit debt well below 30% of the allowed credit limit.

Length of Credit History

Once you are granted some credit the FICO score model looks at how long you have been in good standing with your credit. If you have a good history with your creditors, you can count on it helping your overall credit health. The length of your credit history accounts for 15% of your score.

Mix of Credit

Mix of credit accounts for 10% of your FICO score according to Fair Isaac. So you need credit cards, installment loans, auto loans, department store credit, etc…… The rule of thumb is to have at least 3 to 4 lines of different types of credit to get the best overall score.

New Credit

New credit accounts for 10% of your FICO score. The FICO score model does not like to see you applying for too much credit. Too many hard credit inquiries will affect your credit score. The rule of thumb is around 3 to 4 different types of credit.

Identity Theft & Credit Monitoring

Make sure you are pulling a copy of your free credit report regularly. With the identity theft problem it is recommended to set up some type of credit monitoring with immediate alerts. So if something happens you will know about it quickly.

Co-Signing

Co-signing is a big problem as well. We don’t recommend co-signing for anyone. If a family member or friend does not have the credit to buy, the best thing they can do to get credit established is to get a couple of secured credit cards. This is the fastest way to improved credit health. With a little history, usually 12 months of good payment history the creditors will open the doors of credit.



Richard

Chane Steiner asked:


You can raise your credit scores by taking a close look at your credit reports and creating a plan of action to improve them. It takes time and a continual effort from you to raise your credit scores. There are really now quick-fixes of besides paying down debt and to successfully disputing negative information on your credit report.

One of the most important things you can do is simply pay your bills on time – that should be fairly obvious. Late payments play a major role in driving down your credit scores. You will also want to keep your debt-to-credit-limit (or available credit) ratio as low as possible. Never let it get above 40%. If you don’t have many positive accounts reporting, you may want to open some new accounts to raise your debt-to-available-credit ratio. Try to get an unsecured credit card from your local credit union or a secured card from a legitimate site online. Remember; don’t apply for too many because the inquiries count against your credit score.

Don’t close unused accounts, especially if they are old and reporting positive, because zero balances can help your score. Also, don’t open several new accounts in a short period, especially if your credit history is less than three years old. Too many inquiries in a short period of time can really be hurtful to your credit scores. Apply for credit wisely.

It should be mentioned though, that pulling your own credit does not harm your scores. In fact, many people think it’s wise to use a monthly credit monitoring service online to monitor your progress and make sure there are no unauthorized inquiries or new accounts showing up on your reports.

As mentioned, disputing negative accounts on your credit reports is an excellent way to raise your credit scores. All negative accounts on your credit report should be disputed to make sure they are accurate. If they are not, they must be removed. You don’t have to be dishonest when disputing accounts; the burden of proof is on the credit bureaus and the lenders. If you know that an account is yours, do not dispute it as “not mine”.

It’s the credit bureau’s obligation by law to verify the account and show proof that every little thing they are reporting is 100% accurate. If it’s an old account and the lender no longer has the records to verify an account, guess what? It must be removed. Just remember to always be careful and honest when disputing. Unintended consequences happen quite frequently with credit bureaus. They know how to play the game and they are NOT happy about having to verify your accounts, so be smart about it or you will find yourself with even worse credit.



Rodney

Joshua Mann asked:


If you are making payments on your home and are worried about whether you have mortgage bad credit history, the best thing you can do is to check your credit. Making sure of what your score is will help you to know if you need to work on repairing it or if it is in good shape.

If you have had any late payments, they will probably show on your credit making the score drop. One way to avoid this is by having your payment directly debited from your checking account and have this done directly after payday so you don’t have to worry about the money being there.

These days about every major purchase you will make is financed. From your car to your home practically every single thing you have is owned by a bank, finance company, or mortgage company. So mortgage bad credit history is not as uncommon as you might think.

You can take steps to improve your credit if you have mortgage bad credit history. Try doubling up payments on some of your financed items. This will show that you are making every effort to make sure they are paid on time and will show on your credit. If you have credit cards, try to limit yourself to one and keep a low balance. Charging it to the limit will show you carrying a high balance and credit ratings are not as good for high balances as keeping it at about one-third of your limit.

If you subscribe to a credit monitoring service, you can keep track of your credit far better than just checking it once every 6 months or whenever you think of it. Credit monitoring not only lets you know if your score goes up but if too many people are pulling your credit causing it to go down. This is vital for you if you want to improve your credit.

If you are thinking of refinancing to consolidate all your bills, do some comparison shopping before you start filling out applications. When you apply to a bank or mortgage company, they pull your credit history. This is one of the main causes of mortgage bad credit history. Too many inquiries within a certain time causes your score to drop. However, a consolidation loan can be an excellent way of combining all your payments to a lower interest rate loan and giving you the chance to improve your mortgage bad credit history.

The first step you must take to improve your mortgage bad credit history is to determine what your credit rating is and what steps you are willing to take to change it to a better credit score. If you keep track of your credit, you will not have any surprises and will be in a better position to have good credit rather than bad. If you are willing to put forth the effort, you can be on the road to better credit in no time.



Thelma

dalmatianguy2002 asked:


Ok I have a question about my credit score. It’s currently around 660. I have one open real estate account with around $123,000 left on it (had it for almost 4 years, never a late payment) and my house is for sale. So I plan on having that paid off sometime over the summer. Will this raise my credit score?? I also have 3 credit cards, all with a balance of $0, no late payments, the highest has a limit of $500 and lowest a limit of $500. The other is $1,500 I believe. My score a 691 a month ago, then all the sudden it dropped to 660, which was kind of weird. I have Experian’s triple advantage program, which monitors it daily. I called them and the lady said my debt ratio could be causing that. She said that by paying off my house loan in full it should raise it by quite a bit. Anyone have a guess as to what it could raise to once it is paid off in full? Oh, and I have no negative information like defaults, bankruptcies, late payments, ect,. Best guess anyone??
I meant the highest has a limit of $5,000 and the lowest $500, sorry for the confusion!

Rodney