Tag: CREDIT REPORT

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Freaked Out by the Equifax Hack? Here’s What You Need to Know

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Source: iStock

About 143 million consumers’ sensitive information has been compromised in what was one of the worst data breaches to date in size and potential impact on consumers. Credit reporting agency Equifax announced the breach Thursday, more than a month after detecting the intrusion.

Equifax is one of the three national credit reporting agencies (the others being TransUnion and Experian) and collects a wide variety of consumers’ sensitive and personally identifiable information (PII). The information on credit reports determines credit scores and is used in lending decisions, among other things.

What happened

The breach exposed the names, Social Security numbers, birth dates, addresses, and, in some instances, driver’s license numbers of about 44 percent of the current American population. Hackers also took the credit card numbers for about 209,000 U.S. consumers and dispute documents for 182,000 U.S. consumers.

In its announcement, Equifax said “criminals exploited a U.S. website application vulnerability to gain access” to the files. In addition to the millions of U.S. consumers affected, the company says the criminals had access to limited personal information of some U.K. and Canadian residents.

The Atlanta-based reporting agency said the thieves had access to the data from mid-May through July 2017, but it didn’t discover the breach until July 29. Equifax announced the breach more than a month after discovering it and hiring a cybersecurity firm to investigate.

The company says it’s also working with law enforcement authorities and that its investigation will be complete soon. Equifax has not said who they believe attacked their database.

What the breach means for consumers

The breach isn’t the largest to date, but it’s close. In 2016, Yahoo announced an attack that affected 500 million users. Another breach, announced just a few months later, involved 1 billion users. In those breaches, hackers stole users’ phone numbers and passwords.

The Equifax breach could be worse in impact, given the sensitive nature of the consumer data the company has on file. In its release, Equifax said it had found “no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases.” That doesn’t necessarily mean the information hasn’t been misused or that it won’t be misused, as signs of identity theft may not immediately show up on a credit report.

“If you were going to rate this breach from one to 10, this is a 10. The amount of sensitive info that is contained in the Equifax database is staggering,” says Adam Levin, founder of CyberScout and author of “Swiped,” a book on how and why consumers can protect themselves from identity theft.

When this level of information has been compromised, it “opens up the door for thieves to commit many different other types of identity theft. Not just financial, but criminal, government, medical theft as well,” says Eva Velasquez,the president of Identity Theft Resource Center.

Levin adds, when Social Security numbers are part of a database that’s been exposed, all of the individuals who have their numbers in that database will need to be “looking over their shoulders for the rest of their lives.” The Social Security Administration rarely changes someone’s Social Security number.

What to do now

First, don’t panic.

“People really feel violated when things like this happen,” says Velasquez. “Direct your energy from being angry or upset and feeling powerless to actually doing something and taking some steps to feel more empowered.”

Levin says the breach may add to “breach fatigue” — how the drastic rise in security breach causes consumers to believe breaches are inevitable and react to them apathetically instead of with urgency.

“But it shouldn’t,” Levin says. “It should be a clarion call. Unfortunately, as consumers we have to think of this as as if we’re alone. The government has failed us. The financial industry has failed us, and frankly we have failed ourselves. It’s important that we develop a culture of privacy and security.”

Find out if you are one of the impacted
Given the increasing threat and frequency of data breaches, everyone should be proactive in detecting identity theft. For this breach in particular, Equifax set up a website to see if you’re one of the people affected and how to enroll in the free year of credit monitoring it’s offering victims.

Visit equifaxsecurity2017.com and click on “Potential Impact.”

You’ll see a page with a large, rectangular button that says “Check Potential Impact” and a few lines of text.

Source: Equifax

The text explains that if you click on the link that says “Check Potential Impact,” you’ll be taken to a form that asks you to provide your last name and the last six digits of your Social Security number.

Based on that information, you’ll then be shown a message that says whether your personal information may have been impacted by the breach.

Source: Equifax

Regardless of the message you see, Equifax will give you the option to enroll in a credit monitoring service from TrustedID Premier. Beware: if you enroll, you’ll have to agree to waive some of your rights to sue Equifax. The arbitration clause is written in all caps in the company’s terms of service, but consumers may miss the language. The Washington Post reported earlier Equifax on Friday updated its terms to incorporate a way out of the arbitration clause.

Equifax cleared up the confusion Friday afternoon by adding the following information to its FAQs section on equifaxsecurity2017.com:

“The arbitration clause and class action wavier included in the TrustedID Premier Terms of Use applies to the free credit file monitoring and identity theft protection products, and not the cybersecurity incident.”

However, New York State Attorney General Eric Schneiderman still found the addition “unacceptable.”

Consumers can be excluded if they let Equifax know within 30 days in writing they would like to be excluded from the arbitration clause, but must first accept the agreement.

If you choose to enroll, you’ll be given an enrollment date. There’s quite a backlog of people enrolling, so you have to take it upon yourself to return to the site on your enrollment date. In short: You have to take your protection into your own hands. Equifax isn’t doing it for you.

Source: Equifax

Sign up for credit monitoring

Equifax is offering one year of free credit monitoring through TrustedID Premier to all U.S. consumers, regardless of whether they were affected by the data breach. There are five services under the program:

  • Get a free copy of your Equifax credit report.
  • Sign up for credit monitoring and automated alerts to be notified of key changes to your credit report on any of the major big three reporting agencies.
  • Put a freeze on your Equifax credit report.
  • Scan suspicious sites for use of your Social Security number.
  • Get up to $1 million of identity theft insurance to help you pay for any costs you may incur if someone commits identity fraud against you.

Even if you don’t want to enroll in Equifax’s service, you should enroll in a credit monitoring service, like free options offered through Credit Karma, Discover, Mint, Wells Fargo, and Capital One® — there are lots of ways to keep tabs on your credit.

Some identity theft protection services like the ones offered through myFICO, charge a monthly fee to monitor your credit year-round and provide identity theft insurance.

Regularly review your credit reports

You’re entitled to a free annual credit report from each of the major credit bureaus, which you can get through annualcreditreport.com. Carefully check your credit report for any accounts or recent activity you don’t recognize.

Make a plan to respond to identity theft

Detecting identity theft as soon as possible is crucial to minimizing the damage and stress it can cause — that’s where credit monitoring and reviewing your credit reports comes in. But the next step is just as important: Know what to do when it happens.

You can dispute errors on your credit report, file a police report documenting the identity theft, and do the legwork of resolving any problems it causes. You can also pay for identity theft insurance or identity theft resolution services (some employers offer this as a benefit, so check with your human resources department). Here’s a guide on identity theft resolution, so you know what to do in case you see anything suspicious. Even if you don’t see anything out of the ordinary, you should continue to remain vigilant in monitoring your credit activity.

Freeze your credit report

Velasquez says a credit security freeze is an option impacted consumers should look at. It prevents any application for new credit without first verifying your identity. If you want to apply for new credit, you’ll have to “thaw” your credit reports. The credit bureaus charge a fee, which varies by state, every time you freeze and thaw your credit report.

“While that does create some added inconvenience, the level of protection is worth it,” says Velasquez.

Be alert for unusual activity

Now is the time to practice what Velasquez calls good “identity hygiene.”

“Being vigilant about your identity is just a part of the world that we live in,” says Velasquez. “ If being involved in a data breach is the catalyst that brings that to the top of your mind, then we can see that as a positive.”

Velasquez recommends consumers act proactively and remain cognizant of anything that may involve using or verifying their identity. For example, if you receive a notice from a government agency about benefits or some weird explanation of benefits, pay attention to it.

Even after you do things like enroll in credit monitoring and freeze your credit, continue to do your best to watch out for signs of abuse. Don’t wait until you start receiving strange calls from government agencies and debt collectors.

When tax season rolls around, file your return as soon as possible. Identity thieves frequently use Social Security numbers to get fraudulent refunds, and if they file before you do, it will further complicate your tax-filing process.

At the least, go through your financial statements regularly (the more often, the better) to look for anything out of the ordinary. While protection is top of mind, sign up for any alerts you can set up on your mobile banking app to receive transaction notifications.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Building Credit, Credit Cards, Featured

Where to Get Your Credit Report for Free

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Where to Get Your Credit Report for Free

If you haven’t checked your credit report lately, you’re not alone. A 2016 survey conducted by Princeton Survey Research Associates International found more than half — about 54% — of Americans hadn’t even checked their credit score — the number constructed from factors in your credit report — within the past year. What’s worse, almost a quarter of respondents had never checked their score, making them extremely vulnerable to financial crime. Checking your credit report may seem like any other financial chore, but you shouldn’t keep placing it on the back burner. Similarly to getting a check-up at the doctor’s office, checking your credit report is a preventative measure you should take at least once a year with a bonus: it’s free.

What Is a Credit Report?

Your credit report paints a financial picture of your life. It is a complete history of your use of credit going back at least seven years, good and bad. This includes credit card accounts, student and personal loans, and mortgages, and information about how you use them such as payment history or accounts that have gone to collections. It may also include any utility and other bills that have gone unpaid and were sent to collections. There are three main companies that track your credit report: Experian, Equifax, and TransUnion.

Don’t confuse your credit report with your FICO credit score. Your credit score is a numerical figure that is calculated by using the information from your credit reports. Banks and lenders weigh information from your credit report to create a credit score to gauge how responsible you are when it comes to credit. If your credit reports show a solid history of on-time payments and a good mix of different types of loans, your score will reflect that. Likewise, if your credit report shows lots of missed payments and debt collection accounts, you can expect a poor score.

Knowing the information that is currently on your credit report can help you stay ahead of fraudsters and give you details about how you can improve your credit score. If you don’t check your credit report annually, you may not be able to accurately track the health of your credit score, or know when someone has used stolen personal information from you. In addition to those benefits, checking your reports annually can be an exciting way to benchmark your financial progress.

Where to Get Free Credit Reports

You should check your credit report annually for yourself, but you may also need a report to apply for a car loan or to rent an apartment, etc. When you do need a copy of your report, you can get one for free from a few sources.

You are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting bureaus. You can order a free copy of your credit report from all three bureaus from AnnualCreditReport.com. Like the name implies, you can only order each report once a year for free.

Since you only get one free report from each of the three bureaus per year, stagger them throughout the year. For example, once every four months, request a report from one of the bureaus.

If you want to get an update on your credit report more than once a year, but you don’t want to pay for it, there are a bunch of tools out there that offer credit monitoring for free.

Credit.com offers a Credit Report Card tool to monitor your Experian credit report. All you need to do is go to credit.com, and click “Free Credit Report Card” under the “Credit Cards & Score” tab to create an account. The report card updates every 14 days.

Credit Karma gives you access to your TransUnion and Equifax credit reports for free. You can also sign up for their free credit and account monitoring services. If you do, you’ll receive an email alert whenever your credit score changes, and you’ll be notified whenever a new account is opened. The reports update weekly.

Credit Sesame gives you access to your TransUnion credit report via their credit monitoring service. The service updates your report each month.

Mint.com, a free money-management website and app, gives anyone with a Mint account access to their free Equifax credit report. The report is updated every 30 to 60 days.

Quizzle offers a free VantageScore — a scoring model developed by all three credit bureaus — and a free Equifax credit report, which is updated every six months.

Once You Have Your Report

Once you see your credit report, you should check it carefully for any wrong or negative information impacting your credit score. Double check to make sure the open accounts reported all belong to you. Check that the payment information is accurate and all of the account balances are correct. If you find any errors, you should dispute them directly through the bureau websites. MagnifyMoney has a more in-depth guide about how to do that here.

You might not see any errors, but realize that you need to work on rebuilding your credit. A healthy credit score can be very helpful to you when making a large purchase like a car or first home. MagnifyMoney’s complete guide to help you rebuild your credit can be found here.

You may also notice that you’ve been a victim of identity fraud. That may take a few more steps to clear up, but you can find what to do here.

 

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Building Credit

Get Your Free Credit Report: Where to Find It For All 3 Bureaus

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Credit score large

Knowing what’s on your credit report is important. The information it contains dictates your credit score, which helps financial institutions decide what kind of interest rate to give you on car loans, mortgages, personal loans, and more. If your score is low enough, it may even prevent you from obtaining credit at all.

You may assume that because you’re a responsible individual, your credit report is spotless. That’s a dangerous assumption. All too often, responsible people are shocked when they find lender errors, medical-related financial data, and, in the worst cases, evidence of identity theft on the previously assumed pristine credit report.

Understanding that checking your credit report is important is the first step. The second is actually checking. Through our research, we’ve identified free and low-cost ways to get your hands on your credit report from each of the three credit reporting bureaus: Equifax, Experian, and TransUnion, without running the risk of monthly or annual subscription fees.

Equifax

To keep costs down while viewing your Equifax credit report, you can utilize one of these methods:

  • Go to AnnualCreditReport.com to get your credit report for free. This is a government website that provides you with your credit score from each bureau once per year. Some people choose to spread out their dates of access so they can keep an eye on their report throughout the year. For example, you may choose to access Equifax’s copy of your report in February, Experian’s in June, and TransUnion’s in October. By checking with one bureau quarterly, you’re more likely to catch errors as they surface. That being said, there is no guarantee that your report will be identical across all three bureaus.
  • Go to Quizzle to get free access to your full Equifax credit report once every three months.
  • Go to Credit Karma to get free access to your full Equifax credit report, which can be updated weekly.
  • Go directly to Equifax’s website and pay $15.95. Also included in this price is your Equifax Credit Score. Once you purchase, the information will be available to you for 30 days, giving you time to print out the necessary documentation for your records. You should print out your reports no matter which method you use. While you will be provided with your Equifax Credit Score, you should be aware that this is not the same score lenders look at when evaluating your creditworthiness.
  • Go to myFICO’s website and pay $19.95 for its FICO Score 1B Report. This package gives you your credit report from one bureau, your FICO 8 score, and 5-6 versions of your FICO score for different lending situations, such as mortgages, auto loans, and credit cards. (myFICO’s three bureau package is $59.85.)

Experian

TransUnion

  • Go to AnnualCreditReport.com to get your credit report for free.
  • Go to Credit Karma to get free access to your full TransUnion credit report, which can be updated weekly.
  • The page where you can buy your one-time TransUnion credit report directly through TransUnion, without any ongoing credit monitoring services, is conspicuously difficult to find for most users. After research we’ve located the page here. A copy of your TransUnion credit report will cost you $11.95 when you purchase directly through TransUnion.
  • Go to Credit Sesame, where you can purchase a copy of your full TransUnion credit report for $9.95.
  • Go to myFICO’s website and pay $19.95 for its FICO Score 1B Report. Its three-bureau package is outlined above, under Equifax.

Free is Rarely Free

With the exception of AnnualCreditReport.com, which is a part of the federal government’s Fair Credit Reporting Act, you should always be wary when someone wants to give you something for “free.” Sometimes it may be a great offer. Sites like Credit Karma and Quizzle offer you free credit reports in exchange for permission to send you emails full of credit offers that you can either take or leave on the table. Credit Karma, and Credit Sesame also offer an estimated credit score, while Quizzle gives you your Vantage credit score. These scores are free, and good approximations, but are still not the FICO scores that most lenders will use when evaluating your credit worthiness.

Other times, however, the deal you’re roped into won’t be so generous. When someone tells you they are providing you with your credit report for free, always read the fine print. For example, TransUnion and Experian currently offer $1 credit report with a free period of credit monitoring. The catch? If you don’t cancel within a certain timeframe, you’ll start getting billed for credit monitoring on a monthly basis.

With the exception of the government’s site, it’s important to remember that everyone is trying to sell you something.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

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Building Credit, Reviews

Quizzle Review: Free Credit Reports and Premium Services

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Credit-Score_lg (1)

There are many sites on the Internet where you can obtain a free credit report. You may wonder what’s the big difference between each free service. Well, one main difference is the type of score each site provides and the credit bureau from which it’s pulled. Quizzle offers the VantageScore 3.0 from Equifax for free. In addition to the free service, it has paid plans for extras like monitoring for identity fraud.

An Overview of the Free Quizzle Service

Quizzle gives subscribers free reports and scores every 3 months. Your credit is checked with a soft pull so it won’t impact your score. The report from Equifax includes each of your credit accounts including mortgages, credit cards, student loans, medical bills, car loans and other accounts that don’t fit neatly into a category.

Along with the report, your free credit score comes with score analysis. Using score analysis you can find out what’s currently helping and hurting your score. There’s also a score trend report, which shows how your score has changed over time so you can track your progress and identify negative trends.

Do you find it difficult to understand why your credit score takes a dip or makes a leap? Quizzle has an answer for that, too. The credit score dashboard comes with a comparison tool for you to look at credit reports together and zero in on what’s causing your score to fluctuate. No more going line-by-line through your report to guess the reason why your score goes up or down. Finally, there’s a chronological tool that shows each important event in your credit history.

Quizzle also provides home loan recommendations using technology from Quicken Loans. Recommendations are made using your income, debt, home value estimates and how long you plan to own a home.

[Best Free Credit Score Sites for Each Bureau]

Keep in Mind

It’s important to remember that part of the reason the service is free is because it will attempt to see you products. Using the data already collected on you, there will be credit card recommendations, mortgage tips and loan suggestions. You shouldn’t just assume these are actually the best options for you because sites like Quizzle will profit off you clicking through and signing up for a service. Instead, be sure to comparison shop for the best deals before making a decision.

Extra Quizzle Pro Services

If you’re looking for updates more frequently, identity monitoring and other protections there are two Quizzle Pro options available. The first plan is Quizzle Pro and costs $8 per month. The plan includes:

  • Monthly Credit Reports
  • Monthly Credit Scores
  • 24/7 Credit Monitoring
  • Score Analysis
  • Your Credit History Timeline
  • Report Comparison

Most of the Quizzle Pro features we’ve already covered in the free Quizzle section. The main difference between the Quizzle free addition and the Quizzle Pro edition is you get monthly updates.

The Quizzle Pro+ plan costs $15 per month and includes:

  • Everything from the Quizzle Pro plan
  • Identity Scan detects identity theft globally
  • Public Records Monitoring for court and criminal records, payday loans and change of address requests in your name
  • Sex Offender Monitoring informs you of sex offenders living near you
  • Lost Wallet Protection helps you cancel and replace your cards if your wallet is stolen
  • $1M Insurance Policy reimburses you for costs incurred if your identity is stolen
  • Tri-Bureau Dispute Resolution to dispute report errors with all three credit bureaus
  • 24/7 Live Help available at your service at any time

[The Best Options for Rebuilding Your Credit Score]

How Quizzle Determines Your Credit Score

As mentioned, the score provided by Quizzle is a VantageScore 3.0 from Equifax. Scores range from 300 to 850. The VantageScore uses the following factors to determine your score (from most influential to least influential):

  • Payment History
  • Age & Type of Credit
  • Percentage of Credit Limit Used
  • Total Balances/Debt
  • Recent Credit Behavior
  • Available Credit

Your Quizzle credit score may differ from your FICO score, which is still used by many lenders to determine creditworthiness. This is one hang-up that can be frustrating to users of free credit reporting sites. Each site spits out a different score and usually it’s not a true FICO score. Some have even dubbed free site scores FAKO scores (a play on FICO).

Why is your FICO score different from your Quizzle score? Credit factors are weighted differently in the scoring process. Scores also fluctuate depending on which bureau it’s pulled from, TransUnion, Equifax or Experian. For this reason, you have multiple FICO scores as well. Nevertheless, having an idea of where you stand is invaluable. If you’re not willing to spend about $20 for a FICO score, you can still keep abreast of each detail on your credit report and have an approximate idea of your score with a free site like Quizzle.

Quizzle & Data Security

Most of us are wary when we have to type our Social Security numbers in online. It’s understandable if you’re hesitant to join a service like Quizzle since it requires you put in personal information. Unfortunately, there’s no way around inputting details like your Social Security number, birthdate and address if you want your credit score.

Quizzle takes security pretty seriously and it’s obvious through all of the services it provides for identity monitoring. It uses Secure Socket Layer or SSL a transaction encryption protocol to keep information bounced back and forth between servers safe. It also uses 128-Bit Domestic Grade Strong Encryption as well as firewalls and other safety procedures.

What’s the Catch?

There’s no money catch. You can obtain a 100% free credit score and credit report and you won’t be asked for your credit card information. Although the one drawback is you don’t get a free credit report that’s updated often. Credit scores and reports can change as frequently as every 30 days depending on credit account closing dates. In comparison, Credit Karma offers you free weekly updates.

Either way, you should sign up for a free service or obtain your free annual report, which comes directly from a credit bureau. It’ll help you catch inaccuracies and fraud, plus help you know where you stand, which gives you an opportunity to clean up or protect your financial life.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor at taylor@magnifymoney.com

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Life Events, Mortgage

Open Credit Report Disputes Can Sabotage Your Chance For a Mortgage

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Purchase agreement for house

After months of searching through listings, you’ve finally found your dream home. Your offer has been accepted and you’ve started daydreaming about future dinner parties, contemporary light fixtures, and planting a backyard herb garden. Just one problem — the financing hasn’t been approved.

The mortgage underwriting process can seemingly last a lifetime when it’s standing between you and your dream home. However, the timeline hasn’t always been such a nail-biter for prospective homebuyers.

The housing bubble leading up to The Great Recession created a hunger from investors for mortgage-backed securities. As a result, borrowing costs were lowered, lending standards were loosened, and many homebuyers were approved for loans they couldn’t afford. When the housing market collapsed, many Americans were in trouble. These predatory lending practices contributed to both the financial crisis and The Great Recession.

A direct response to The Great Recession, the Dodd-Frank Wall Street Reform and Consumer Protection Act or “Dodd-Frank” was signed into law in 2010. This financial reform legislation included the creation of the Consumer Financial Protection Bureau who established the Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act.

These new standards include a much more comprehensive financial verification process for mortgages including a closer look at an applicant’s credit history.

Why Do Credit Scores Matter?

Before you begin the home buying process, it’s smart to review your credit report and have a copy of your FICO score handy. Your FICO score is assigned by the credit reporting agencies based on the information within your credit report. A FICO score also factors into your Ability to Repay qualifications.

Tip: You can request a free credit report once a year from AnnualCreditReport.com.

Credit scores aren’t the only thing mortgage loan officers worry about, but a FICO score can heavily influence the interest rate you are able to secure. The highest scores qualify consumers for the best possible mortgage rates.

It’s critical to arm yourself with this information in advance. Plus, it gives you the opportunity to dispute any inaccuracies you’ve discovered and clean up your report.

What is a Credit Report Dispute?

Credit report inaccuracies are relatively common. Inaccurate information can happen for a variety of reasons — a clerical error, a shared name, or even identity theft. And inaccurate information in your credit report can harm your score. That’s why it’s important to regularly keep track of what’s happening.

Under the Fair Credit Reporting Act (FCRA), consumers have the right to dispute inaccurate information. Fortunately, it’s easier than ever to file a dispute with all three credit reporting agencies online.

The problem is, many disputes can go unresolved for long periods of time. An unresolved dispute can be particularly troublesome for consumers applying for a mortgage. Many applicants don’t realize an open credit report dispute can raise a red flag to lenders, and may even prevent mortgage approval.

[Learn more about Fannie Mae’s Frequently Asked Underwriting Questions here.]

How Open Credit Report Disputes Hurt a Mortgage Application

If open credit report disputes are relatively common, how can they hurt a mortgage application?

When a dispute is filed, credit reporting agencies are required to label the item as “in dispute.” An item being actively disputed can not harm your FICO score. In fact, your score will be temporarily inflated while harmful items are being investigated.

Lenders know credit reports with disputed items are not the most accurate picture of a consumer’s history and many require for this status to be removed before approving a mortgage application. This leaves some consumers with a difficult decision to make — accept costly credit report errors or delay applying for a loan until disputes have been resolved.

Fannie Mae & Freddie Mac

Fannie Mae’s automated underwriting system, Desktop Underwriter (DU), automatically issues the warning message “consumer disputed” when a credit report reveals a 30-day or more delinquency reported within 2 years of the inquiry. The lender must confirm the accuracy and completeness of the borrower’s credit report by obtaining a new report without the dispute or manually underwrite the loan.

Loan Prospector, Freddie Mac’s automated underwriting system, follows a similar process. Gaining access to a new credit report with updated information is not an option for the borrower if the creditor won’t correct the information. And when a consumer files a complaint with the credit reporting agencies (TransUnion, Equifax, and Experian), the agencies will often defer to the creditor.

Last fall, the National Consumer Law Center wrote a letter to the Federal Housing Finance Agency, urging reform for the treatment of consumers with credit report disputes. They believe lenders who reject applicants because they don’t want to manually underwrite the loan are in violation of the Equal Credit Opportunity Act (ECOA).

FHA Approved Mortgages

FHA approved mortgages will approve an application with a disputed credit report, however, the process may still be time consuming.

A couple of years ago, the U.S. Department of Housing and Urban Development decided to look more closely at open disputes and provided new instructions for lenders in a Mortgagee Letter (ML). This ML addresses both derogatory and non-derogatory disputes and requires lenders to more carefully evaluate the risk associated with a consumer.

What To Do if You’re Still Struggling

Dealing with an unresolved credit report dispute can turn into a consumer nightmare. Even if you’ve followed best practices, like submitting credit report disputes both in writing and online, you may still be unhappy with the results.

Fortunately, you can still submit a complaint to the Consumer Financial Protection Bureau. They will forward your complaint directly to the company in dispute and work to get a response from them. Another option is to seek guidance from a consumer advocate or an attorney. The National Foundation for Credit Counseling may be a helpful place to start.

Because a credit report and FICO score have such a strong influence on lifelong financial health, the best defense is to be proactive. Regularly monitoring your credit report and working to fix inaccuracies before applying for a mortgage is the best way to prevent major problems.

Kate Dore
Kate Dore |

Kate Dore is a writer at MagnifyMoney. You can email Kate at kate@magnifymoney.com

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Building Credit, How to Complain

Where To Dispute Your Credit Report Online

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

It has never been easier to dispute incorrect information on your credit reports online. You are now able to dispute information to all three credit reporting agencies online. We will provide you with instructions for each reporting agency below.

Just one warning: we highly recommend that you disputes online and in writing. If you do not like the outcome of the dispute, a paper trail will be very helpful for the dispute. And written letters, sent by certified mail, are much more effective. In addition to providing you with the online dispute information, we will also provide you with the mailing address for each credit reporting agency below.

TransUnion

You can dispute with TransUnion at dispute.transunion.com.

You can call them at 1-800-916-8800.

You can dispute in writing at this address:

TrasnUnion, LLC Consumer Dispute Center, PO Box 2000, Chester, PA 19022

Equifax

You can dispute online with Equifax here.

You can dispute in writing at this address:

Equifax Information Services, LLC, PO Box 740256, Atlanta, GA 30374

Equifax does not provide a telephone number on their website. They tell you to refer to the telephone number provided on your credit report.

Experian

You can dispute online with Experian at http://www.experian.com/disputes/.

You can dispute in writing at this address:

Experian’s National Consumer Assistance Center, PO Box 2002, Allen, TX 75013.

Experian has a customer service phone number, which is 1-866-200-6020.

The Process

If you want to dispute an item on your credit report, we recommend the following process.

First, download your most recent credit report from all three credit reporting agencies. You can obtain your free report at AnnualCreditReport.com.  You are allowed to download one free report every year. Don’t be fooled by the free credit score websites. In order to see what is on your credit report, you need to have your full report.

Once you identify the incorrect information, you should dispute in writing and online. When you draft your letter, make sure you keep a copy of your letter for your files. In addition, you should send the letter with certified mail so that you have proof of your correspondence. In your letter, please include as much information as possible. Credit reporting agencies are used to receiving many disputes from people who are just trying to get something legitimate removed. The more details you have and you can share, the better the chance of getting the right outcome during your first dispute.

The credit reporting agencies have 30 days to respond. If you do not like the response that you receive, you do not have to quit. Instead, you should share your complaint with the Consumer Financial Protection Bureau. You can submit your complaint online here.

After you file your appeal with the credit reporting agency, you may want to appeal to the creditor as well. For example, if Capital One has an account that you do not believe is yours, you should send them a letter (also via certified mail) disputing the account. You should include as much information as possible in the letter, and let them know that you will also be disputing the information with the credit reporting agencies.

Once It Is Fixed

Once you get your credit reports fixed, you have the right to ask the credit reporting agencies to send updated information to anyone who requested a report in the last six months. For example, you may have applied for a job and been embarrassed by a collection item that did not belong to you. Once the information is cleared up on your credit report, the credit reporting agency could provide updated information to your employer.

Beware Disputes and Mortgages

If you are applying for a mortgage, you should be very careful before disputing an item on your credit report. For conforming mortgages (Fannie Mae and Freddie Mac), you often are unable to close a mortgage while a dispute is open. And disputes take time. That is another reason why it is important to keep an eye on your credit report regularly.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Do I Really Have Bad Credit?

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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“Do I have bad credit?” The answer to this question can determine whether or not you will be approved for mortgages, auto loans or credit cards. It will also determine how much you will have to pay for those products if you are approved.

Different Types of Credit Scores

The traditional measure of your credit worthiness is a credit score. And the original credit score was FICO. This score is still used in nearly 90% of all lending decisions, and is particularly important in the mortgage market. It is fairly easy to get your FICO score for free. We tell you where you can find a free FICO score here.

FICO measures how successfully you have managed consumer debt in the past. The most important factor in the score is on-time payment history. The score also looks at how much debt you have (the less debt and the lower utilization the better) and how long you’ve had credit. In addition to missed payments, negative items like collections, judgements and foreclosures can have a big impact on your score. Based upon your behavior, you will receive a score between 300 – 850.

The three credit bureaus, tired of FICO’s monopoly, created VantageScore. It looks at many of the same attributes, and it uses the same scale. That is why it is often referred to as the FAKO. Most of the free credit score websites provide you with a VantageScore.

The scale on FICO and VantageScore is similar. You can see what those scores mean here:

  • Above 750: Excellent Credit
  • 680 – 749: Good Credit
  • 620 – 679: “Near Prime” or Acceptable Credit
  • 550 – 619: Sub-prime
  • Below 550: Bad Credit

With Excellent or Good credit, you will likely be approved for almost any credit product. Near-prime customers are seeing more options every day, as banks and finance companies expand their product offerings. Sub-prime borrowers will have fewer options available, and they will all be very expensive.

People with Bad Credit have a score below 550. If your score is this low, it will be very difficult to obtain any financial product. Your focus should be on improving your score, which we explain in our Debt Guide.

There is no difference between having no score and having a bad score. If you have no credit history, you should start building it with a secured credit card.

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Is My Credit Score Enough?

Your credit score is a good indication of whether or not you will be approved, but it is not enough.

Credit card decisions are largely automated and score-driven. However, in addition to your credit score your debt burden is extremely important. Your credit score does not know how much money you make. $20,000 of debt can be a lot (if you make $40,000 a year), or not much at all (if you make $500,000 a year). Your debt burden looks at your monthly expenditure and compares it to your monthly income. Usually, only expenditures reported are the credit bureau are included. That means things like your mortgage, car payment, credit card payments and any other form of unsecured debt. If your debt burden is above 50%, you are typically considered a bad credit risk and would be declined by most lenders. Excellent Credit means a debt burden below 30%. And there are debates about everything in between.

In addition, most banks will look at how rapidly you have been building up debt. If you have been accumulating a lot of debt recently, the bank will likely consider you a high risk, and you will have fewer opportunities to borrow at a good interest rate.

For products like mortgages and auto loans, your down payment and income are also extremely important when the bank considers your level of risk. The lower the down payment, the higher the risk.

Especially for mortgages, you will probably have your income and employment verified. Banks like people with steady jobs and a long history of employment. If you have highly volatile income, you are considered riskier and may be rejected. Or, the bank may not consider all of your income, given its volatility.

So, What Is Bad Credit, Really?

When people talk about their “credit,” they are really talking about their likelihood of being accepted. To have bad credit means that you have a low chance of being approved. And here are the main reasons you find it impossible to get any form of credit approved:

  • Your score is below 550
  • Your debt burden is above 50%
  • You have no credit score
  • You have been building up a lot of debt recently
  • You are unemployed

The only way to improve your debt burden is to pay down your debt or increase your earnings. If you are starting from no credit score, you can build a good one very quickly. Improving a damaged score takes more time, but it can be done. In a worst case scenario, every negative item will disappear from your credit score in seven years. But most people, with focus, can have a dramatically better score in 12 to 18 months.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Credit Reporting Agencies Reach Settlement on Medical Debt

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Today, the New York Attorney General announced a settlement with the three credit reporting agencies that will have big implications for consumers across the entire country. TransUnion, Experian and Equifax, who together have information on more than 200 million Americans, have agreed to make big changes in the way that they report medical debt collection items. According to a recent Consumer Financial Protection Bureau (“CFPB”)  study, over half of all collection items on credit reports are medical.

Medical billing is a complicated process. While at the doctor’s office or hospital, the amount of the insurance reimbursement and patient’s co-payment is often not clear. It can take time for an insurance company to make a payment to the doctor, and often both patients and doctors dispute the total billed and covered amount. All of this takes time. And there are no rules on how long a doctor’s office or collection agency has to wait before reporting your debt to the credit reporting agency. As a result, the time required for complete reimbursement can often lead to a negative collection items landing on your credit report, even if the bill is ultimately paid by the insurance company. Even worse, the FICO credit score currently used by most lenders does not reward repayment of a collection item. Once one lands on your report, the punishment can stay with you for years.

The Attorney General of New York has been waging a battle with the credit reporting agencies, and today was able to unveil a landmark agreement. The credit reporting agencies have agreed that:

  • Medical debt can only be put on a credit report 180 days after after the bill from the doctor. This will give the insurance company time to pay, and people time to understand the cost. Historically, collection agencies could put a collection items on credit reports at their discretion, and they would.
  • If a medical bill is ultimately paid by an insurance company, the credit reporting agency has to remove the item from the credit report. Too often, slow insurance companies ended up wreaking havoc on people’s credit reports.
  • When a consumer disputes something on their report, the agencies will have a trained employee review all documents submitted by individuals when they submit a dispute.

These changes will be rolled out nationally. The credit reporting agencies expect that it will take between six and 39 months for the changes to take effect. However, consumers ultimately have the responsibility to ensure the accuracy of the information on their credit reports. All Americans are entitled under the law to a free annual copy of their credit reports from all three reporting agencies. All Americans should obtain a copy of their credit report every year and look for any negative items. The CFPB explains how to obtain your free score here. If you find a medical collection item that should not be there, you can dispute the transaction directly to the reporting agencies.

Too many people have taken big hits on their credit score because of the complexity of the medical billing process. With this settlement, everyone now has 180 days to agree who pays what with their insurance company. This should go a long way towards making sure that anything reported on a credit report is a true default, and not a simple mistake.

We applaud the attorney general for taking the lead in this settlement, which will benefit people across the country.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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Decoding How FICO Determines Your Credit Score

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Below is an excerpt from our Debt Free Forever Guide. Be sure to download the free guide to help dump debt for good. 

There are a lot of myths out there about credit scoring –hopefully we can help you understand FICO scoring, so you can take action to build your score. There are five major components FICO uses to determine a credit score. Fortunately, understanding the secret sauce can help you build a strong score and healthy credit report. Both a 700+ score and healthy credit report will help keep the rest of your financial life cheaper by enabling you to get lower interest rates on loans and approved for top-tier financial products.

35%: Payment History

This is the single most important part of your credit score. Quite simply, this looks at how many on-time payments that you make. You will:

  • Get rewarded for on-time payments
  • Be punished for missed payments: Not all late payments are created equally. If you are fewer than 30 days late, your missed payment will likely not be reported to the bureau (although you still will be subject to late fees and potential risk-based re-pricing, which can be very expensive). Once you are 30 days late, you will be reported to the credit bureau. The longer you go without paying, the bigger the impact on your score, ie: 60 days late is worse than 30 days late. A single missed payment (of 30 days or more) can still have a big impact on your score. It can take anywhere from 60 to 110 points off your score.

If you don’t pay a medical bill or a cell phone bill, your account may be referred to a collection agency. Once it is with an agency, they can register that debt with the credit bureau, which can have a big negative impact on your score. Most negative information will stay on your credit bureau for 7 years. Positive information will stay on your credit bureau forever, so long as you keep the account open. If you close an account with positive information, then it will typically stay on your report for about 10 years, until that account completely disappears from your credit bureau and score. If you don’t use your credit card (and therefore no payment is due), your score will not improve. You have to use credit in order to get a good score.

However, there is a big myth that you have to borrow money and pay interest to get a good score. That is completely false! So long as you use your credit card (it can even be a small $1 charge) and then pay that statement balance in full, your score will benefit. You do not need to pay interest on a credit card to improve your score. Remember: your goal is to have as much positive information as possible, with very little negative information. That means you should be as focused on adding positive information to your credit report as you are at avoiding negative information.

30%: Amount Owed

This part of your credit score will look at how much debt you have. Your credit report uses your statement balance. So, even if you pay your credit card statement in full every month (never pay any interest), it would still show as debt on your credit report, because it uses your statement balance. This part of your score will look at a few elements:

  • The total amount of debt that you owe across all of your accounts. On your credit cards, the utilization ?If you have a lot of credit card debt, your score can be hit.
  • In addition to the total amount of debt that you have, your utilization is very important.

To calculate utilization, divide your statement balance (across all of your credit cards) by your available credit (across all of your credit cards). For example, if you have credit limits of $40,000 across 4 credit cards, and you have a total balance of $20,000 – then you have a utilization of 50%.

To have a good score, you will want your total utilization to be below 20%.

Why is utilization such an important concept? If you use every bit of credit made available to you, then it looks like you do not have self-restraint. Maxing out all of your credit cards is a big warning sign to lenders.

If you are able to restrain yourself and have a lot of available credit (that you do not use), then you are showing self-discipline.

It may sound strange (and, in fact, it is): but the key to having a good credit score is having a lot of available credit and not using it.

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15%: Length of Credit History

This is the easiest part of the credit score to get right. So long as you don’t close accounts, every day this part of your score improves (because all of your accounts become one day older).

FICO will look at the age of your oldest account, as well as the average age of accounts.

10%: Types of Credit in Use

If you have experience with different types of credit (installment loans, revolving loans, credit cards, etc.) than you will get more points than if you don’t have a variety of experience.

The most important product is a credit card. If you have a credit card and manage it well, then you will be rewarded in this. Remember: there is no greater temptation than a credit card. If you are able to withstand the temptation of plastic, you get the most points.

10%: New Credit

If you open up a lot of new credit in a short period of time, you will be sending a warning signal to the credit bureau. But this part of the credit score has turned into a myth that scares a lot of people. They are afraid to shop for the best deals, because they are afraid of what shopping for credit would do to their credit scores.

The FICO score will look at credit inquiries from the last 12 months.

This factor is only 10% of your total score. And, there are a lot of myths. Lets break a few of them now:

  • Checking my own credit report will hurt my score: FALSE! If you check your own credit report at www.annualcreditreport.com, it will not hurt your score
  • If I shop around for a good mortgage or auto loan rate, my score will get crushed: FALSE! Multiple inquiries for a mortgage or auto loan are usually treated as a single inquiry.
  • If I shop around for a balance transfer credit card, my score will get crushed: FALSE! If your score does decline, it probably will not decline by much. You can expect 10-20 points per credit application. But, remember: you apply for a balance transfer to help reduce your balance faster. When you open a new credit card and transfer your balance, then you will be able to:
    • Have a lower overall utilization, because you have new credit available (and of course you will not use it!)
    • Pay off your debt faster, because the interest rate is lower. At the end of 12 months, your score should be even higher than when you applied for the balance transfer or personal loan.

Quick Steps to Building and Keeping a Good Credit Score

  • Use your credit card every month, but keep your utilization well below 20%. In other words, never charge more than 20% of your available credit. You can reduce your utilization by (a) paying down your debt and (b) increasing the credit that you have available
  • Make your payments on time every month If you repeat these two things over time, you will eventually have a score above 700. However, if your score is below 700 and you want to improve it, you need to focus on:
  • Putting more positive information into the credit bureau
  • Getting your utilization below 20%
  • Dealing with the negative information

Download our Debt Free Forever Guide! It’s FREE and will help get you back on track.

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Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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FTC Finds a Majority of Credit Report Disputes Go Unresolved For Years

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Finding an error on your credit report is relatively common. The reason can be as innocent as misreporting because someone shares your name or a clerk mistyping your Social Security Number. It can also be the result of a villainous act like identity theft. Regardless of the reason, disputing incorrect information on a credit report can lead to a consumer nightmare.

As required by the Fair and Accurate Credit Transactions Act (“FACT Act”), the Federal Trade Commission recently released its sixth and final report on a national study of accuracy and completeness of consumer credit reports.

In layman’s terms: the FTC is ensuring the three credit bureaus (Experian, Equifax and Transunion) are doing their due-diligence when it comes to correcting errors on credit reports.

A 2012 report discovered 26% of surveyed consumers found at least one potential error on a credit report with 21% receiving modifications to at least one dispute on a report and 13% seeing a change in credit scores as a result of the modifications.

This 2012 report led to a demand for a follow up study from policymakers, specifically focused on unresolved credit report disputes. The follow up study researched three key issues:

  1. “Quantifies the frequency of reinsertion, or the reappearance of previously removed negative information.”
  2. “Investigates several questions relating to the consumers who disputed items that were not modified in the original dispute process.”
  3. “Asses whether consumers continue to allege inaccuracies after the CRA (credit reporting agency) has verified the disputed information as accurate.”

The FTC followed up with survey participants who had unresolved disputed and found the following

  • 69% of people believe there is still an error, while the other 31% agree that there was no error to begin with and thus agreed with the CRA’s finding
  • Of those who believe there is still an error, only 45% plan to continue their credit report dispute

Pointing to the difficulty and time commitment it can be to dispute errors.

  • 41% of people were not contacted at all by the bureau after filing their credit report dispute

A major concern, which reveals the possibility the credit bureaus need to adjust their notification systems. A consumer may have been notified, but the response went unnoticed.

  • Of those who did get notified, 48% of them received no reason provided as to why there was a modification in the credit bureau’s response

 The FTC did conclude this doesn’t mean the CRA failed to provide a reason, but that if there was one, it was not easily accessible to a consumer.

  • Of this who still believe there is an error but are giving up on their dispute, only 20% are giving up because they don’t think it’s hurting them or aren’t looking for credit. 42% are giving up because it’s too hard, or the time sink is fruitless

This should be a big issue to the credit bureaus and a red flag that the process to dispute an item needs to be changed and streamlined. Notably, it can be incredibly difficult to tussle with errors, like with the very much alive George Sledge who has been marked as deceased by the credit bureaus.

You can read the full report from the FTC here. You can information about credit reports and credit scores in our blog section, Building Credit.

Dealing with a lingering credit report dispute? Submit a complaint to the FTC and Consumer Finance Protection Bureau (CFPB).

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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