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How to Dispute Mistakes On Your Credit Report

Holly Johnson — Wed, 01 Jun 2022 22:46:07 +0000

There are several obvious reasons to give a hoot about your credit score, and very few reasons you should ignore it. After all, you'll need a good credit score and a solid credit history if you ever plan to purchase a home or take out an auto loan. A bad credit score can even come back to bite you if you want to rent an apartment or apply for certain jobs.

But your score isn't the only detail you need to pay attention to. You also need to keep an eye on your credit report — the document that lists your formal credit history including any accounts you have open, balances due, and payments you've made.

Your report and your score are intricately intertwined. If bad information gets on your credit report due to fraud or misreporting, this can easily cause your credit score to nosedive. Likewise, a clear credit report with nothing but true (and positive) information can help your credit score reach greater heights.

That's why, every single year, you should get a free copy of your credit report from all three credit reporting agencies — Experian, Equifax, and TransUnion. Fortunately, this part is easy to accomplish via AnnualCreditReport.com.

How to dispute information on your credit report

Once you have a copy of your credit report from all three bureaus, you'll want to look over all the details to make sure they're correct. Incorrect information you might notice on your report may include:

Errors regarding your name or personal information
Accounts that aren't even yours
Accounts belonging to someone with a name that is similar to yours
Closed accounts that are reported as open
Incorrectly reported late payments
Accounts listed more than once
Incorrect balances on accounts
Incorrect credit limits on accounts

Thanks to the Fair Credit Reporting Act (FCRA), both the credit bureau and whoever is providing them with information are responsible for correcting misinformation on your credit report. This means that, if a specific retailer or bank is reporting an account that isn't yours or an incorrect balance, both the credit bureau and the retailer or bank have to work together to make things right.

If you find an error, here are the steps you should take right away:

Inform the credit bureau with the incorrect information of the mistake

The first step you should take is informing the credit reporting agency of their error, keeping in mind that it's possible not all the credit bureaus will have the same information. You should let them know about the mistake in writing, taking special care to list important details about the mistake with proper documentation. The Federal Trade Commission (FTC) even offers a sample letter you can use if you need help.

Note that credit bureaus usually have 30 days to investigate your claim and they are required to get back to you with a response. They are also required to forward the information you sent them to the provider who shared the information with them in the first place.

Inform whoever provided the information of the mistake

You'll also want to provide the company reporting the incorrect information with copies of any documentation that prove an error has occurred. Make sure to include all details required to prove your claim along with copies of documentation that backs you up. The FTC offers another sample dispute letter you can use for this instance.

Watch for your credit report to be updated

Generally speaking, credit reporting agencies are required to inform you in writing of the results of your case. They are also legally required to give you another free copy of your credit report if your dispute caused a permanent change.

You also have the option to ask the credit bureau to send notices of any corrections to anyone who has requested your credit report within the last six months. You can even have an updated copy sent to anyone who has asked for a modified version of your credit report for reasons regarding employment.

Caring about your credit

While the steps above may sound tedious, it's crucial to understand the damage incorrect information on your credit report can do. If you have inaccurate late payments on your report, for example, you could see your credit score plummet through no fault of your own. And if there are accounts on your credit report that aren't even yours, that could signify a much larger problem, such as outright identity theft.

Fortunately, the small amount of time required to dispute an item on your credit report really can pay off in a big way. After all, any negative information you manage to get wiped clean should immediately stop dragging your score down.

However, you should also note that you'll only be able to get false negative information removed from your credit reports. Any damaging information that's true will have to linger on your report until enough time has passed. Generally speaking, negative information and reporting can remain on your credit report for up to seven years and bankruptcy can stay on your report for 10 years.

The bottom line

Errors happen all the time, and they may never be uncovered if you don't find them yourself. In addition to staying on top of your credit reports, it can help to sign up for a free service that gives you updates on new accounts in your name or fluctuations in your credit score. CreditKarma.com and CreditSesame.com are two that offer a similar free service with these features, so they are both worth checking out.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5-Minute Finance: Checking Your Credit Score

Dan Rafter — Tue, 24 Apr 2018 09:00:07 +0000

Your credit score is one of the most important markers of your financial wellbeing. A strong score will net you the best interest rates on car loans, a mortgage, and credit cards. A weak score can leave you struggling to get approved for financing at all.

It's vital that you regularly check your credit score and make efforts to keep it on the up and up. Not sure how to do this? It's easy. All you need is five minutes.

What is your credit score?

You actually have several credit scores. FICO credit scores are the ones that most lenders check, but there are even several different FICO scores. The most common one that lenders use today is the FICO Score 8. VantageScore is another type of credit score that lenders use. Both FICO and VantageScore use a scale of 300 to 850.

Each three-digit credit score that you have is generated using the information in your credit reports. They serve as a designation of your risk level, and tell lenders whether you have a history of paying your bills on time and managing your credit well. If you have a strong credit history, your score will be higher. If you have managed your finances poorly, your score will probably be low.

In general, most lenders consider a FICO credit score of 740 or higher to be a good one. A score under 640 could make it difficult to qualify for auto or mortgage loans or earn the best credit card offers.

Why you should check your credit score

Knowing your credit score is important, especially before you plan to make any large purchases or try to qualify for financing. If your score is low, lenders might not approve you for that loan at all. If they do, they'll charge you higher interest rates to protect themselves from the increased risk they are taking on by lending to you.

With higher interest rates, your monthly payments on mortgage, student, auto, and personal loans will be higher. Your credit cards, too, will come with higher interest rates, which will cost you if you carry a balance on them each month. If you know your score is low, you can take steps to steadily build it before you apply for new loans or credit cards.

It's also important to keep an eye on your credit for any strange activity. If your score suddenly plummets due to a late payment you know you made on time, it's important to take steps to correct the mistake on your credit report ASAP.

How to check your credit score

You can order your FICO score from myFICO.com. Depending on how much information you request, ordering your score can cost you from $19.95 to $59.85. For $19.95, you can order your FICO score from one of the credit reporting bureaus: Experian, Equifax, or TransUnion. For $59.85, you can order your FICO score from all three credit bureaus.

You can also order your FICO score directly from one of the three credit bureaus. Again, you'll have to pay for this, and be careful to read the fine print. For example, Experian offers your FICO Score 8 when you order a $1 copy of your credit report — just be aware you'll be automatically enrolled in their CreditWorks credit monitoring program, and will be charged $21.95 a month if you forget to opt out. Experian also offers the option to order FICO scores from all three bureaus for $39.99. The other bureaus charge similar prices.

Several websites, such as CreditSesame, also offer free credit scores. These scores might not always be the official FICO scores that lenders use, but they will still give you a ballpark idea of how strong or weak your credit is. Just make sure that the site you order your free scores from doesn't ask for your credit card number. If it does, you might accidentally sign up for a credit monitoring service that will charge you each month until you remember to cancel it.

Your credit card provider might also provide you a free version of your credit score. Again, this might not be an official FICO score, but it will also give you a sense of whether you need to work on improving your credit.

Next steps

Once you know your credit score — or at least one of them — it's time to take steps to improve it. You'll have to practice sound financial habits over time to see an improvement.

The best way to boost your score is to make all of your payments on time. If you build a long record of on-time payments, your score will gradually improve.

At the same time, work on paying down your credit card debt. Your score will suffer if you have too much revolving debt, so work to chip away at it as best as you can. Always make more than the minimum required monthly payment. You'll never pay down your credit card debt by only paying the minimum.

Don't close credit cards you aren't using. Closing an account will automatically boost the percentage of your available credit that you are using, which will cause your score to fall. But don't ignore your credit cards, either. Buying items with your card and immediately making your payment is a great way to build your score. Make sure you only charge what you can afford to pay back in full each month.

Additional resources

Five Ways to Improve Your Credit Score Fast

Is It Worth Paying for Your Credit Score?

FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

I Checked My Credit Score in 11 Places — Here's What I Learned

Carrie Kirby — Thu, 12 Apr 2018 08:00:06 +0000

For decades after credit scores emerged in the late 1950s, they were rarely seen by anyone but loan officers. Nowadays, offers of free and cheap credit scores are everywhere — from the online dashboard of your bank or credit card account, to self-help finance sites. Other sites charge as much as $20 for a credit score.

Why would you pay $20 for something you could get for free? Is the free score as accurate as the $20 score? It turns out, the answers to those questions are not simple, but — spoiler alert — it is sometimes worth it to pay up.

I tested the various credit scores available myself by visiting a number of free sites, checking the free scores offered by my bank and credit cards, and by purchasing three credit score products. Of my three checking accounts, two of them offered free credit scores. Of three credit card issuers I looked at, all of them offered free scores, although I sometimes had to dig around for them once signed into my account. I learned that different credit scoring systems can come up with a range of numbers based on the same credit history. While all my scores were pretty good, they were spread over a 39-point range, which put me in the top category on some score reports, but only the second-best on others.

Test results

My results are summarized in the chart below. The chart notes the website or other source where I got each score, the name of the particular score I got (more on that in a minute), the credit bureau that provided the information upon which each score was based, and the price for the score. All the scores are based on a range of 300-850 points, unless otherwise noted. (See also: What Is a Good Credit Score and Why Is It Important?)

I am just one person, with one set of credit cards and one mortgage. How can I have so many different credit scores? How can I even have different credit scores that say they are based on the credit report from the same bureau? Which score is correct? (See also: FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?)

What you're paying for

Barry Paperno, who worked in the credit industry for 40 years and now writes about credit in his blog, Speaking of Credit, explained that I was looking at least three different products, created by different companies. The free score offered by popular websites is usually the VantageScore, formulated by a software product co-created in 2006 by the three major credit bureaus, Experian, TransUnion, and Equifax.

The $15.95 score was created by Equifax with its own proprietary scoring system. Both VantageScore and the proprietary scores offered by the individual credit bureaus are great for educational purposes; in other words, they'll tell you if you have generally good credit or bad credit. But most banks don't use them to make lending decisions, Paperno says.

The scores I paid $19.95 each for are from FICO, the original credit score company and the one that most banks turn to when making mortgage decisions.

Another small difference among the different scores may be how old they are. The free scores that my financial institutions and Credit Sesame gave me were between two weeks and two months old, while the ones I paid for were dated only a couple of days before I checked them, and the free scores I got from FreeCreditScore.com and Credit Karma were dated the same day I checked them. (See also: 4 Surprising Things Lenders Check Besides Your Credit Score)

To further complicate things, several weeks passed between when I paid for the myFICO scores and when I checked the free scores. myFICO, I found, doesn't update once you've paid, so those scores are now almost a month old. During the intervening time, I charged some large purchases, and my credit score declined by 10 points or more on some of the other score reports but you'd never know that looking at the myFICO scores.

Which score should you get?

None of these scores are fake or inaccurate. All work in similar ways, assessing how likely you are to repay debt by looking at your history and your current use of credit. All provide an accurate picture of how your credit stacks up compared to other consumers. Which one you should get depends on your purpose.

Credit score health check

If you just want to know whether you have good or bad credit, any score will do. In that case, you might as well get a free score from your bank or credit card issuer, or go to one of the free sites listed here.

There is no apparent advantage to going to a credit score site rather than getting it from your own bank or credit card site. Different sites have different bells and whistles; some show you the history of your score, while others take information from your credit report to help explain your score.

Mortgage

The type of score you look at matters more if your goal is to get a new credit card, mortgage, or other type of loan. "Then your goal is to get your score to a certain point so that your credit application will be accepted," says Paperno. "Since the scores tend to differ, it becomes important to know what score the lender is likely to pull."

If it's a mortgage lender, they're likely to pull older FICO scores from each credit bureau, namely the FICO 2, FICO 4, and FICO 5 scores, possibly along with others. When you purchase your FICO score from myFICO, you can get your FICO Score 8 from all three credit bureaus, as well as a number of industry-specific scores. So if you want a mortgage and you're not sure if your credit is good enough (760 is usually the cutoff to qualify for the best rates, Paperno says), it's a great idea to go this route.

For a one-off snapshot of your FICO scores, go to myFICO.com and click on the Products tab at the top. You can buy one-time single-bureau credit reports (FICO Score 1B Report for $19.95) or three-bureau reports (FICO Score 3B Report for $59.85).

Why pay more for scores from all three credit bureaus instead of just getting one? Since the credit report from each bureau could be slightly different (each may include some details but not others), it's best to avoid surprises by making sure that the credit score based on each report is in the same range.

Car loan

If you're getting a car loan, the lender might pull the industry-specific FICO Auto Score, which comes with the scores from myFICO. To know for sure, call the finance department at the dealership you're considering and ask which bureau they pull from or which scores they use.

Next, go to myFICO.com, click on the Products tab at the top of the page, buy one or all three scores from myFICO, then click on "View additional FICO score versions used in mortgage, auto and bank card decisions." There, you'll find your FICO Auto Score 8, optimized to reflect the credit behavior that auto lenders care most about, with an emphasis on how well you've paid off previous auto loans (mine was 779, four points higher than my FICO Score 8).

Credit card

There is also a FICO score customized for the credit card industry, FICO Bankcard Score, but Paperno said that it's not as popular with credit card lenders as the Auto Score is with car lenders. He says it's not worth paying money just to get a Bankcard score. Any free FICO Score 8 is good enough.

Personal loan

For personal loans, even a 50-point difference in your credit score could affect your interest rate by several percentage points, according to GoBankingRates.com. But many lenders will do a soft pull of your credit during a prequalification process.

How do you know which score you're getting?

Most of the time, if you're getting it for free you can assume you're looking at a VantageScore, but not always. Most websites will identify — sometimes in small print — the source of the score they're providing. I purchased my three-bureau FICO score report from myFICO.com for $59.85; Experian also offers a three-score and credit report package for $39.99.

But is it possible to find a FICO score for free? Yes. I got an Experian-based FICO Score 8 at FreeCreditScore.com, a site owned by Experian. And my bank provided my Equifax-based FICO Bankcard score.

If you want to follow Paperno's advice and check FICO scores from all three credit bureaus when you have an important borrowing decision ahead of you, you will have to pay to do so. I didn't find any way to get all three for free.

Why are your FICO Score and VantageScore different?

Now that I understand that both FICO and VantageScore give me an accurate picture of my credit, I still wonder how they can look at the same reports and come up with different numbers. In particular, my FICO scores are my lowest scores. Is it always that way?

"FICO tends to be a little stricter," Paperno says. Although both systems consider basically the same facts — late payments, how much credit you have available, how much debt you have, the age of your accounts, etc. — they might vary slightly in the details. For example, if you have an account that went to collections and you paid it off, VantageScore will drop that black mark from your record, but it will still influence most versions of the FICO Score.

Buyer beware

When searching for free credit scores, I came across a number of Google ads promising them, leading to websites I was unfamiliar with. I found that many such sites are owned by companies with some pretty unsatisfied customers, many who complain they were charged for ongoing credit monitoring services without their knowledge.

Even with the big name companies, make sure when paying for a credit score that you know what you're signing up for. Many will at least ask you if you want to sign up for a paid monthly credit monitoring subscription. When I purchased the $1 TransUnion score, I at first completely missed that I had also signed up for a weeklong free trial of a $19.95-per-month credit monitoring service. Fortunately, I canceled it in time to avoid billing. I didn't want to repeat that experience, so when I clicked on a $1 credit score offer from Experian and realized that buying it would sign me up for a free trial of their $14.99-per-month monitoring service, I didn't buy either.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Freeze Your Credit

Dan Rafter — Fri, 15 Dec 2017 09:00:07 +0000

Cybersecurity experts called it a wake-up call: In September 2017, national credit bureau Equifax suffered a massive data breach that exposed the personal information of over 145 million customers. The breach was a startling reminder that your personal information might not be as secure as you would like to believe. It also woke many consumers up to the concept of freezing their credit.

Here's a quick guide on how credit freezes work, how you can apply one yourself, and what you have to do to thaw your credit freeze. (See also: How to Protect Your Credit After the Equifax Breach)

What a credit freeze does

A credit freeze prevents lenders or financial institutions from accessing your credit report. It can also stop an identity thief from opening an account or getting credit in your name, even if they have accessed your personal information through a security breach like the one that hit Equifax in September.

Even if Equifax reports that you weren’t impacted by the breach (which you can check at EquifaxSeurity2017), you might still consider a credit freeze. Doing this stops any of your personal and financial information from being reported to lenders and creditors. This is important; if a thief tries to use this information to apply for a new credit card or loan in your name, the application would automatically be rejected. (See also: 5 Times You Must Freeze Your Credit Report)

How to apply a freeze

Even though Equifax suffered the breach, freezing your credit with Equifax alone is not enough. To completely protect your personal information, you must freeze your credit with all three national credit bureaus: Equifax, Experian, and TransUnion.

The quickest way to do this is by logging onto the security freeze pages maintained by each bureau:

You can also call each of the bureaus by phone to request a credit freeze. You can reach Equifax at 1-800-685-1111, TransUnion at 1-888-909-8872, and Experian at 1-888-397-3742.

What you need for a freeze

First, you'll usually have to pay to file a credit freeze. That fee varies depending on where you live. Fees typically range from $3 to $10, but in many states, this fee is waived if you can prove with an investigative or incident report that you already have been the victim of identity theft.

Depending on where you live, you'll have to provide a list of documents that the credit bureaus can use to verify your identity. For instance, in California, you must provide your full name, including your middle initial and any suffixes such as "junior" or "senior." You must also provide your Social Security number; complete addresses for the last two years; birth date; copy of a government-issued ID card such as a driver's license or state ID card; and one copy of a utility bill, bank statement, insurance statement, or other form of proof of identity.

The credit bureaus will send you a letter confirming that your freeze is in place. It will remain in place until you ask to remove it.

Unfreezing

You probably don’t want your credit freeze to remain in place forever. If you need to apply for a mortgage or auto loan, for instance, you’ll want lenders to be able to access your credit. Fortunately, each credit bureau will send you your own personal identification number — or PIN — that you can use to unfreeze and refreeze your credit.

If you are applying for a car loan, for instance, you can use your three PINs to temporarily unfreeze your credit. Your auto lender can then check your credit. Once your loan is granted, you can refreeze your credit with your PIN.

Unfreezing your credit can range from free to $12. You can unfreeze your credit for one specific creditor or for a set period of time.

Your credit freeze will remain in effect in most states until you request its removal. But in the states of Nebraska, Pennsylvania, Kentucky, and South Dakota, credit freezes are automatically removed after seven years. You can freeze your credit longer in these states, but you’ll have to remember to renew the freeze on your own.

The fraud alert alternative

A credit freeze is labor-intensive. It can also slow your ability to qualify for new loans or credit cards. As an alternative, you could consider signing up for fraud alerts from all three bureaus.

In a fraud alert, a credit-reporting agency will put a warning on your credit reports. This tells lenders that they need to carefully verify the identity of anyone trying to open an account in a consumer’s name. (See also: 9 Signs Your Identity Was Stolen)

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Protect Your Credit After the Equifax Breach

Dr Penny Pincher — Mon, 02 Oct 2017 09:00:06 +0000

Approximately 143 million records were stolen in the recent breach of Equifax, including names, Social Security numbers, birth dates, and addresses. Even before the Equifax incident, identity theft has been on the rise. With this recent theft of millions of records, the risk of credit fraud is sure to grow.

You can take measures to protect yourself from identity theft. These options range from watching out for suspicious activity on your accounts, to paying for credit monitoring services or even freezing access to your credit reports.

Is it worth the trouble and expense to freeze your credit report, or can less intensive steps sufficiently mitigate your risk of identity theft? Here are the options available to you.

Manual account monitoring

You can check your monthly statements from existing bank and credit accounts for unexpected transactions. If you see a transaction you did not make, you have a major red flag.

How much cost and effort?

The cost is zero, but it takes effort to stay on top of all your statements and look for unexpected activity. If you spot theft, you will need to work with your financial institution to undo the fraudulent transactions.

How much protection?

In many cases, you will not be responsible for fraudulent transactions if you report them to the financial institution and work to resolve the issue. (See also: Why Credit Is Safer Than Debit)

Manual credit report monitoring

In addition to monitoring transactions on your existing accounts, you need to keep watch in case thieves open new credit accounts using your stolen personal information. You can request a free copy of your credit reports every 12 months from the major credit bureaus (TransUnion, Equifax, and Experian) and manually check for new accounts that were created by someone else.

How much cost and effort?

Free if you use the free credit reports, limited to one per year per credit bureau. If you want to check your reports more frequently than once per year, you can pay a small fee, typically around $10 per report.

How much protection?

Even if you are diligent in requesting and checking your credit reports, a fraudulent account could go unnoticed for some time due to the delay between when a fraudulent account is created and when you obtain an updated credit report and notice the new account.

How to get your free credit reports

Visit AnnualCreditReport.com to request your free credit reports. You can request reports from all three credit bureaus at once, or you can order from one bureau at a time. Ordering one free report every four months can help you keep an eye on your credit throughout the year without paying any fees.

Credit report monitoring service

You can sign up for credit monitoring services that send alerts when new credit accounts are opened, or when a credit inquiry has been made on your report. (See also: Is Credit Monitoring Ever Worth It?)

How much cost and effort?

Credit monitoring services are offered by the credit reporting agencies and other companies with costs ranging from a few dollars per month up to $25 per month. Free credit monitoring is available from Credit Karma whose free service is supported by loan and credit offers.

Credit monitoring is automatic in the sense that it provides alerts when an inquiry occurs or a new account is opened, but you will need to check the alerts to see if the activity is legitimate. And if there is fraudulent activity, you will need to take steps to counter it.

How much protection?

Credit monitoring provides alerts when new credit accounts are opened, but it does not stop thieves from opening fake accounts. The automatic monitoring simply helps you spot fraudulent new accounts quickly and take action to reverse charges and close the accounts.

Identity theft insurance

Identity theft insurance pays for some of the expenses you could incur associated with restoring your identity, including legal fees and fees from financial institutions. Coverage may also include out-of-pocket losses from credit fraud or other misuses of your personal information.

How much cost and effort?

Identity theft insurance typically costs around $25 to $60 per year and may include credit monitoring and other services.

How much protection?

If you become a victim of identity theft and are covered by identity theft insurance, the ball will still be in your court to resolve the issues. The insurance will cover certain types of expenses you may incur and limits your out-of-pocket losses.

Fraud alert

You can place a fraud alert on your credit report, which notifies credit issuers to contact you for confirmation before setting up a new credit account. An initial fraud alert stays on your credit report for 90 days, and you can extend it for another 90 days after that. An extended fraud alert for confirmed cases of identity theft lasts for seven years.

In addition to putting a fraud alert on your credit report for new credit accounts, you can also request a security alert with ChexSystems for new checking and savings accounts.

How much cost and effort?

It is free to place a fraud alert on your credit file. Once you put a fraud alert on your file with any one of the three major credit reporting agencies, it will be shared with the other two.

How much protection?

When a fraud alert is on your credit report, credit issuers are supposed to contact you before opening a new credit account, but compliance may vary.

Credit report freeze

A credit freeze with the credit reporting agencies prevents your credit report from being shared unless you "unfreeze" your credit report. This prevents thieves from opening fraudulent new credit accounts using stolen personal information.

How much cost and effort?

A credit freeze comes with a higher level of hassle and cost than some other fraud prevention measures. You need to freeze your credit report with each of the three credit reporting agencies, which means requesting the freeze three times. Then every time you want to apply for a credit account, or allow access to your credit report for an employment or housing application, you will need to unfreeze your credit report, then refreeze it afterward.

You'll pay fees every time you freeze or unfreeze your account. The fees vary by state, but generally they range from $5 to $15 for each freeze and unfreeze. Note that in light of the security breach, Equifax is offering free credit freezes until November 21, 2017.

Each bureau will give you a personal identification number (PIN) that you'll need to keep track of in order to unfreeze your reports. You can also request a security freeze with ChexSystems to block new checking or savings accounts from being opened at no cost.

How much protection?

A credit freeze is effective at stopping new accounts from being opened, but you'll still need to monitor existing bank and credit accounts for fraudulent activity, since existing accounts are not affected by a credit freeze. If you know you'll be applying for credit (or a job or apartment that might require a credit check) multiple times in the near future — or if a credit freeze just sounds like too much hassle — you may be better off signing up for a credit monitoring service and perhaps placing a fraud alert on your credit report instead of doing a freeze.

If you rarely or never apply for credit, and will not need to provide access to your credit report for employers or landlords, you may be better off freezing your credit report indefinitely. Keep in mind, though, that it is possible that the PIN needed to unfreeze your credit report could be compromised by thieves, who could unfreeze your credit report themselves. For added protection, you could place a fraud alert on your credit report before freezing it.

A "lock" may be another option

Starting January 31, 2018, Equifax will be offering consumers a new, permanent service that gives them the ability to "lock" and "unlock" their credit report at will. This new service is reported to work in a similar fashion to a freeze, and it is yet to be determined what exactly will differentiate the two methods. Equifax claims the service will include more "modern authentication techniques" for unlocking and accessing your credit report. If you elect this route, make sure to carefully read the terms and conditions before signing up.

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7 Things Your Credit Report Does NOT Include

Dan Rafter — Fri, 22 Sep 2017 08:30:11 +0000

Ordering your credit reports every year and studying them carefully is a smart way to get a window into your financial well-being. But while credit reports contain a wealth of information about your history with money, they don't tell you everything about your financial health.

In fact, there is plenty of financial information you won't find in any of your credit reports.

1. Your credit score

Your credit score is a key financial number. It gives lenders a snapshot of how responsible you've been with your finances. If you have thousands of dollars of credit card debt and you routinely pay bills late, your credit score will be low. If you pay your bills on time and you are using a smaller percentage of your available credit, your score will be high.

Unfortunately, your credit report does not contain your credit score. To obtain your score, you'll have to pay one of the three national credit bureaus for it. Your credit card provider might also list a credit score on your monthly statements. This score might not be your official FICO credit score — the one most lenders rely on when deciding whether to lend you money. It can still give you a general idea of where you stand, though, and is worth keeping track of. (See also: FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?)

2. Your payments to utility companies

You pay your gas and electric bills on time every month. You might think that this key indicator of your financial responsibility would be listed on your credit report. Unfortunately, it's not. Utilities don't report payments to the credit bureaus.

This means that your on-time payments to utility providers don't help your credit score. Late payments aren't reported, either. But be careful: If you're far enough behind on your payments that a utility sends your account to collections, that will show up on your credit report. And that black mark will give lenders reason to hesitate when deciding whether you qualify for a loan. An account in collections can also send your credit score plummeting by 100 points or more. (See also: Account in Collections? Here's How to Fix It)

3. Your rent payments

Paying your rent on time probably won't help your credit score, either. That's because most landlords still don't report rent payments to the credit bureaus, meaning that these payments don't show up on your credit report.

There are services today, though, that landlords can use to report rent payments to the bureaus. Most landlords don't use these services yet, but the fact that they are available could be a sign that rent information will become more common on credit reports in the future.

4. Medical bills

The payments you make to doctors, dentists, and other medical professionals don't show up on your credit reports, either. Again, this is because doctors don't report payment information to the credit bureaus.

Paying these bills late, though, could show up on your credit report if your medical providers send your account to a collections agency.

5. Your salary

You'd think the money you earn would be a key indicator of your financial health, and it is. But it's not an indicator of how likely you are to pay your bills on time and manage your credit. Because of this, it doesn't show up on your credit reports.

6. A job loss

Your credit reports do provide some basic employment information, with some listing your past and most recent employers. But if you've just lost your job, that information won't be included in your report. Your reports never mention whether you are still employed, and they don't list how long you've worked with any one company.

7. Your spouse's credit history

Your credit reports list financial information about you and you alone. If you're married, your spouse's history of paying bills and running up debt won't show up.

However, if you and your spouse both have your names on a loan or credit card, that debt will show up on both of your credit reports. So will late payments you made on these accounts, even if paying the bills was your spouse's responsibility and not yours.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Here's How Often Your Credit Score Gets Calculated

Julie Rains — Tue, 16 May 2017 08:30:14 +0000

Achieving and maintaining an excellent credit score may help you qualify for the best interest rates when you borrow money, potentially saving you thousands of dollars over the life of your loans. That's why it's especially important to check your credit when you begin to consider borrowing for a large purchase such as a home or car.

It helps to first understand how your credit score is calculated, what you can do to change it, and how long those changes take to impact your score.

Factors determining credit scores

Credit scores derive from credit reports, which consist of information about your credit history and activity with various lenders and creditors. Credit reports are maintained by the major credit reporting agencies, Equifax, Experian, and TransUnion.

FICO is the credit score provider most commonly used by lenders The five factors that go into your FICO score, broken down by how much they contribute to your score, are:

Payment history (35 percent): How timely have you been with payments on credit card balances, student loans, mortgages, etc.?
Amount you owe (30 percent): What are your credit balances and credit utilization ratio (your current balances compared to your credit limits)?
Credit history length (15 percent): How many months or years have you had credit and maintained relationships with creditors?
New credit (10 percent): How many new credit cards, loans, and credit-related accounts do you have? Too much new credit could make you appear desperate to lenders.
Types of accounts or credit mix (10 percent): how many different types of accounts do you have (mortgage debt, car loans, credit cards, etc.)? The more types you have, the better it is for your score.

Making timely payments, judiciously using available credit, maintaining long-standing account relationships, avoiding new credit, and holding diverse types of credit may influence your credit score positively.

How frequently credit scores get calculated

If you're working to improve your credit score, you may wonder how frequently your score is calculated and adjusted. Theoretically, knowing this frequency could enable you to monitor your credit score's movement, up or down, in response to your actions.

According to Experian's Director of Public Education Rod Griffin, credit scores aren't ever truly adjusted. Instead, each and every credit score that's calculated is unique. It's a snapshot reflecting your creditworthiness at a particular moment in time. Your score is based on your credit report when a score is requested and the proprietary formulas created by lenders or credit score providers, such as FICO and VantageScore. In addition, these providers each have different scoring models for different lending purposes. (See also: What Do All the Different Credit Scores Mean?)

For example, if you're getting ready to borrow money to purchase a new home, your mortgage lender may use a FICO score that's indicative of your credit risk for mortgage borrowing.

A few days later, you might decide to apply for a credit card. The card issuer may use a bank card scoring model in calculating this credit score. The number may be different from the mortgage-based score because it's based on a different formula and possibly new information on your credit report.

Generally, your credit report is updated whenever new information becomes available, for example, when creditors report payments at the end of their billing cycles.

Despite varying formulas and purposes, your credit scores tend to be similar, Griffin says. That's because scores are based on your credit reports, and the information contained in these reports tends to be consistent among reporting agencies.

Credit steps to take before a mortgage or car loan application

Griffin says reviewing your credit reports should be part of your financial routine. He emphasizes the value of keeping reports positive, not simply trying to fix your numbers: "Taking care of your credit reports means taking care of your credit scores."

But if checking your credit reports hasn't been on your to-do list, start paying attention to your information as soon as you think about borrowing for a major purchase and at least three to six months before applying for a loan. This time frame may allow you time to dispute any errors and make moves that could enhance your creditworthiness.

Here are steps to consider taking.

1. Review credit reports for accuracy

Access your credit reports from the three major credit reporting agencies through AnnualCreditReport.com. Federal law mandates that you can get one free credit report per year from each agency.

Review reports to make sure the information is accurate and up-to-date. For example, check home addresses and employer names. Notice whether outdated information lingers.

If something's not right, you can dispute errors on your credit report. Contact the credit reporting agency and information source (such as a former creditor) to describe errors and request corrections. The Federal Trade Commission (FTC) provides useful sample dispute letters for credit reporting agencies and information providers that can help you get an idea of what to write.

You may be able to use dispute resolution processes offered by credit reporting agencies. For example, Experian's online dispute process allows consumers to file a dispute from its website.

2. Look at your scores

Consider requesting a credit score to determine where you stand when trying to use your number to your advantage. A one-time report and score could be helpful to understand your current status and offer a baseline for monitoring changes in the future.

You can get scores using these methods:

Purchase a credit score as an add-on when you access one of your free credit reports.
Buy a one-time report and scores from myFICO or other sources.
Get a credit card that offers a free credit score to its cardholders or try free services like Credit Karma and Credit Sesame.
Purchase credit monitoring services that include credit scores. You can get these from myFICO.com, Equifax, Experian, and TransUnion. (See also: 7 Apps That Monitor Your Credit)

3. Monitor your scores

As you prepare for a major financial event, such as getting a mortgage or refinancing an existing home loan, consider monitoring your credit reports and scores over time to keep on top of any changes that occur.

Credit monitoring is available for a fee from credit reporting agencies and other sources, such as myFICO. You might also consider tracking your credit scores through free sources. For example, you might just keep note of scores offered by your credit card company every month.

This scrutiny can be helpful but alarming. Griffin tells borrowers not to panic if they see changes from month to month, as credit scores move up and down frequently. He says that generally you don't need to be concerned with volatility as long as the scores trend upward over a longer time frame. (See also: Why You Shouldn't Panic If Your Credit Score Drops)

4. Take actions as appropriate

When you receive your credit score, generally you'll also get a list of factors indicating why your number is less than perfect. These risk factors indicate where to focus your attention. (See also: How to Increase Your Credit Score Quickly)

When personal finance educator Kate Horrell's credit score fell from the 800s to 660s just a few months before a mortgage refinance, she realized that the decline reflected two factors: She had taken on new credit using a 0% APR credit card; and she had increased her credit usage to manage about $100,000 in home renovations.

Still, Horrell was surprised at the impact on her scores, considering her stellar history. She couldn't do anything about the new account but found ways to pay off the card balance quickly. When she applied for the mortgage refinance a few months later, her score had increased to the mid-to-high 700s, enabling her to snag a 3.125 percent rate.

Griffin emphasizes that the risk factors named with your credit score don't always warrant action. In some cases, it's not worth it to address risk factors just to raise your score a few points.

For example, my lack of both credit diversity and recent installment loans dings my score, which is still above 800 and considered "exceptional." However, I don't plan on taking out a new loan just to try to boost my number.

While you can't predict the precise impact of specific actions, you can learn what moves reflect positively on your credit report. As your credit report is updated (with new and hopefully, improved, information) your credit scores could trend upward, potentially enabling you to take advantage of your numbers for cost savings.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Read a Credit Report

Damian Davila — Thu, 11 May 2017 08:00:09 +0000

Building and maintaining your credit history takes time and dedication. While there are many things you can do when shooting for that perfect 850 FICO score, checking your free credit report every year from AnnualCreditReport.com is among the best personal finance habits. Once you have a copy of your credit report, let's review step-by-step what to look for.

1. Check your personal information

First things first: Make sure that your credit report correctly shows your name, Social Security Number (SSN), phone number, and address. The three credit bureaus (Equifax, Experian, and TransUnion) keep track of all variations of names and SSNs reported as belonging to you.

You can easily rectify a small error, such as a misspelling, absence of a hyphen in a last name, or transposition of a street number by contacting the credit bureau and providing supporting documentation. Keep an eye out for information that you don't recognize at all — this may be a sign of identity theft. (See also: Don't Panic: Do This If Your Identity Gets Stolen)

2. Verify it's really you

Even after checking that your full name and address are correct, you may recognize some accounts on your report that belong to somebody else in your household. In this case, you may be a victim of a mixed file — when the credit information of two individuals sharing the same name gets mixed up in a single report.

This can be a potential issue in multigenerational homes with several family members sharing the exact name. For example, John Smith Jr. opens a store card but the credit bureaus list the account on the father's report (John Smith Sr.) instead of the son's. That would be a mixed file.

3. Watch out for errors in account ownership

Going back to the example of the father and son, the father may have decided to open the store card in his name, and then add his son as an authorized user, or vice versa. Make sure that reported accounts are only the ones for which you are the owner.

4. Look out for accounts incorrectly reported as late or delinquent

Unless you were more than 30 days past due, you shouldn't have a late or delinquent note on any debt. So, report this right away. (See also: How to Clear Old Debt From Your Credit Report)

If you recently made a payment and your account is now current, keep in mind that there is often a lag when credit bureaus report such incidents. Follow up with the company owning your debt and verify that it has notified the credit bureaus. Keeping your accounts current is critical, because payment history makes up 35 percent of your FICO credit score.

5. Validate key account dates

The most important date to verify is the date that an account was opened, because the length of your credit history accounts for 15 percent of your FICO credit score. Other important dates to verify are date of last payment, and date of first delinquency.

6. Beware accounts listed twice

It can happen! Possible sources of this error are when you upgrade a credit card with the same company, or refinance a loan with the same financial institution. Another possibility is that somebody opened an account on your behalf without your consent.

You also need to watch out for companies transferring the ownership of a delinquent account over to collections agencies. While you're still responsible for paying back what you owe, you're definitely not liable to receive a double (or triple!) whammy on your credit score for the same mistake.

7. Double check credit limits and balances

Double check that your account balances are within a range you recognize, and that your credit card limits are up to date. After all, 30 percent of your FICO score is based on your credit utilization ratio — your total credit card balances divided by your total credit card limits. For example, an outstanding balance of $4,000 with total credit limit of $15,000 would put your credit utilization ratio at 26 percent. The more available credit you have, the lower your credit utilization ratio will be. Most experts recommend this ratio should not exceed 30 percent.

8. Keep an eye on public records

A bankruptcy isn't the only reason you might end up with a public record on your account. Unpaid driving violations, library fines, or other penalties from money owed to the government will come to haunt you on your credit report. Depending on many factors, public records can stay on your report for up to seven years, even after taking care of them. This means that the best time to take care of them is now. (See also: 4 Credit Report Mistakes That Could Be Costing You Big)

9. Corroborate that corrected information has been posted

Chances are at some point, you'll eventually have to report an error. When this happens, always follow up to check that the incorrect information has been replaced and corrected.

What to do if you find an error

If you find any errors in your credit report, refer to the instructions on your credit report to dispute inaccurate or missing data. Here is a useful template from the Consumer Financial Protection Bureau to initiate disputes with the credit bureaus by mail or fax. Or, you can file a dispute online with Equifax, Experian, or TransUnion.

This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Apps That Monitor Your Credit for You

Damian Davila — Tue, 06 Dec 2016 12:00:17 +0000

The average FICO credit score of U.S. consumers is 695, according to the latest data from the FICO company. If you think this number is encouraging, you'll also be glad to hear that 54.7% of Americans are able to score at least a 700!

This data proves that it's very possible to improve your credit score. There's no excuse these days for not monitoring your credit. Credit score monitoring? There are apps for that! Let's review some of the best free and easy to use apps available for giving your credit score a boost.

1. Credit Karma

Claiming that you can sign up for a new account within two minutes, Credit Karma's app offers free credit score tracking. Your score and list of reports are updated weekly. Credit Karma offers a credit report card, which breaks down every factor contributing to your credit score health, such as open credit utilization rate and average age of open credit lines, and helps you understand how your actions affect your credit score.

Keep in mind that Credit Karma shows you a Vantage 3.0 credit score, which isn't the same as a FICO credit score. The app allows you to track your credit score from TransUnion and Equifax (two of three main credit reporting bureaus, the third one is Experian). To learn more details about Credit Karma, take a look at our review.

2. Mint: Money Manager, Budget and Personal Finance

Besides being a free debt management tool, Mint offers a free credit monitoring app that provides an easy-to-understand summary of how you can improve your credit score. The credit score provided under any of these apps is the Equifax Credit Score, which is a proprietary credit model developed by Equifax.

By connecting your bank accounts, credit cards, and investments accounts to your Mint account, you'll have a comprehensive picture of all of your finances, too.

3. Credit Sesame

Credit Sesame's app offers you a peek into your Experian National Equivalency Score (ENES). While the FICO credit score ranges from 300 to 850, the ENES ranges from 360 to 840.

By using this alternate credit scoring model, Credit Sesame is able to perform a "soft" pull on your credit history and show you how much you owe, what your current interest rates are, and what your credit score is.

Additionally, Credit Sesame offers you some refinancing options in partnership with Lending Club to pay off higher-interest debt. To help you understand whether or not this would be a good fit for you, Wise Bread took a closer look at Credit Sesame' services and the steps of the loan process application process through Lending Club.

4. Credit.com

Credit.com is another option to access your Experian National Equivalency Score and Vantage 3.0 credit score at no cost. You'll receive a grade, ranging from A+ to F, for each one of the five factors affecting your credit score: payment history, debt usage, credit age, account mix, and number of inquiries.

Through its visual aids and specific action items, this app allow you to spot credit blunders and understand how to fix them.

5. Experian

Since so many of these apps use the credit rating model from Experian, you may be wondering if you can just go straight to the source. Yes, you can! Through the app you'll monitor changes to your Experian credit profile and have the option to sign up for push notifications directly on your device whenever a change takes place. Your free Experian credit report is updated every 30 days.

6. TransUnion

The credit reporting bureau allows you to check your TransUnion credit report from your smartphone. Similar to the FICO credit score, the TransUnion credit score ranges from 300 to 850. Still, remember that the FICO and TransUnion credit score aren't the same.

7. CreditWise

CreditWise offers free credit monitoring services from Capital One. You don't need to be a Capital One customer to sign up for a new account. If you're an existing user of the Capital One CreditTracker service, you can use your existing username and password that you use at the CapitalOne.com site. Every week, this app will provide your TransUnion credit score. A differentiating factor of CreditWise is its credit simulator, which allows you to simulate ways to improve your TransUnion credit score.

The Bottom Line: Know Your Score!

FICO maintains a total of 28 different FICO scores, which are widely used by issuers of home, auto, and credit card loans. Remember that each one of these apps offers a free snapshot of a credit score based on a separate model and that snapshot is only for educational purposes. If you want to get the actual FICO credit score, you'll have to pay at least $19.95 per month.

While the advice provided by any of these services can be valuable to improve your credit score, your potential lender may be working with a very different score than the one gleaned from an app. If you're working toward meeting the requirements for a mortgage or auto loan, ask your lender what credit score she's using. That way, you'll choose the app that can provide a more accurate estimate.

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What the New Credit Card Formula Means for Your Wallet

Tim Lemke — Mon, 22 Dec 2014 14:00:11 +0000

FICO, the company that provides information to the three major credit bureaus, has made changes that could potentially lead to higher credit scores for millions of Americans.

The changes announced in August from Fair Isaac (FICO) could help those dealing with medical debt, and will also give a boost to people who were dinged with collections but paid off the related debts.

Here's a look at what the changes mean for you.

Medical Bills Won't Hurt You as Much

FICO said that if you are someone whose only negative references are for medical collections, your score will rise an average of 25 points. FICO said it will use a "more sophisticated treatment" to determine the difference between medical and non-medical collections. In essence, FICO learned that many borrowers have medical debt, but that it's not necessarily an indicator that they won't pay back other monies owed. Critics of previous rules said penalizing people for medical debt was unfair, because patients often don't know what they owe hospitals and doctors and high medical fees combined with limited insurance coverage can be catastrophic to people's budgets.

Collections Won't Be Viewed Badly, as Long as You Eventually Paid

Under previous rules, borrowers saw their credit scores go down if there was any record of a collection — even if they eventually paid the debt off in full. In fact, those collections stayed on a person's record as long as seven years, even if they had no other unpaid debts. Now, getting a visit from a collection agency won't hurt you, as long as you pay whatever was owed. The Wall Street Journal reports that about one in ten people who had a collection now have no balance at all. (See also: Best Secured Credit Cards to Rebuild Credit)

Borrowing Should Be Easier

In general, these changes should cause credit scores to go up for most people. That means more people could qualify for loans and credit cards, and those who could already borrow will now get access to lower interest rates. But be careful: Just because you're eligible to borrow more money doesn't mean it's necessarily wise to do so.

In an interview with the Wall Street Journal, one lawyer specializing in consumer protection warned of the possible negative consequences.

"A lot of people really just can't handle credit — you're not really helping them by allowing them to dig themselves into debt," Howard Strong, a lawyer in Tarzana, California, told the newspaper. "It's like a sharp knife — if you don't know how to use it, you can cut yourself."

For Those With a Thin Credit History, It Could Go Either Way

If you're just starting to build your credit, you have what FICO refers to as a "thin file." Previously, those with "thin files" were judged in absolute terms — you either paid your bills or you didn't. Now, FICO has the ability to analyze new borrowers in a more nuanced way. Depending on your payment history, this could improve your score or cause it to go down. If you've been great about paying your bills, even if you have a thin file, you'll probably be unaffected. On the flipside, you probably won't see your score improve if you've missed a lot of payments. It's those folks in the middle that may see an adjustment.

It May Not Impact Anything Right Away

FICO is hoping all three credit bureaus adopt the new scores this year. But it will take some time for lenders to adjust their policies. FICO said it will begin educating lenders now in the hopes they will be on board with the changes later in 2015.

It's Still up to the Lender

The FICO Score 9 is not the only score that lenders can look at. The Wall Street Journal reported that there are about 45 different kinds of scores that lenders can look at, depending on the type of loan a borrower may be seeking. And even if they do look at the new FICO score and like what they see, they might still deny your loan for other reasons.

None of This Matters If You're Awesome

These changes to FICO scores could have an enormous positive impact for those with debt. But if you use credit responsibly by paying bills in full and on time, you probably already have great credit and won't notice much of a change.

Do you expect the new FICO formula to change your credit score? Or are you already awesome?

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Join Our Tweetchat on Thursday 4/10, 12pm PST for a Chance to Win $300 in Prizes!

Ashley Jacobs — Wed, 09 Apr 2014 22:59:14 +0000

Join our Tweetchat this Thursday at 12:00 p.m. Pacific/ 3p.m. Eastern for lively conversation and a chance to win a $200 gift card or one of two $50 gift cards! Use #WBChat and #CreditInsight to participate.

This week's topic: Credit scores and more! Learn why credit scores are so important, what makes up a credit score, and why it is essential to understand, build and manage your credit. . We’ll chat about why having credit insight is about more than just a score and we’d love to know how you educate yourself about credit!

For an easy way to keep track of the conversation, try using our special Tweetchat Chatroom.

Anyone can participate, but you must be following @WiseBread and RSVP below to win our prizes!

First place: $200 Amazon GC
Second place: $50 Amazon GC
Third place: $50 Amazon GC

Winner must be US resident 18 or older. Winners are randomly selected and announced within 1 day of the chat.

To make it easier for us to keep track of attendees and pick our winners, please RSVP below with your twitter ID (put that in the "Link Title" field), email address, and your twitter URL (put that in the "URL" field, do not put your blog's url in there). Winners will be selected at random from RSVPs. If a winner is chosen who RSVPed but did not attend a 2nd winner will be chosen.

This Week's Chat is Sponsored by Experian

This week, Experian is sponsoring $300 in prizes for our chat! They will be joining our chat, tweeting from @Experian_US.

More About Experian

Here's a message from our sponsor:

“Experian promotes greater financial health and opportunity among consumers by enabling them to understand, manage and protect their personal information, helping them control financial aspects of key life events, and make the most advantageous financial and purchasing decisions.”

New Parenting Chat Immediately Before #WBChat

Our sister blog Parenting Squad (@ParentingSquad) will be hosting a parenting chat every Thursday at 11:00 am Pacific. Drop by for fun parenting conversations and a chance to win prizes! Use #PSChat to participate.

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Join Our Tweetchat on Thursday 1/17, 12pm PST for a Chance to Win $300 in Prizes!

Ashley Jacobs — Thu, 17 Jan 2013 00:04:17 +0000

Join our Tweetchat this Thursday at 12:00 p.m. Pacific/ 3p.m. Eastern for lively conversation and a chance to win a $200 gift card or one of two $50 gift cards! Use #WBChat to participate.

This week's topic: Credit Monitoring and Dispute! Learn about what impacts credit scores, why having a good credit score is important, and how to dispute your credit report. Share tips on how frequently to check your credit score and how to improve your score!

For an easy way to keep track of the conversation, try using our special Tweetchat Chatroom.

Anyone can participate, but you must be following @WiseBread and RSVP below to win our prizes!

First place: $200 Amazon GC
Second place: $50 Amazon GC
Third place: $50 Amazon GC

Winner must be US resident 18 or older. Winners are randomly selected and announced within 1 day of the chat.

This Week's Chat is Sponsored by Experian

This week, Experian is sponsoring $300 in prizes for our chat! They will be joining our chat (tweeting from @Experian_US) to share tips, tricks, and articles to help young adults with their finances!

More About Experian

Here's a message from our sponsor:

At Experian, we’re working to promote greater financial health and opportunity among consumers by helping them understand, manage, and protect their personal information. If you’re interested in learning more about your credit – and how you can build a great credit history – subscribe to our Ask Experian blog written by credit experts Maxine Sweet and Rod Griffin. And join our monthly chats with them on Facebook.com/ExperianUS and Twitter @Experian_US to get your specific questions answered.

New Parenting Chat Immediately Before #WBChat

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Once Bitten Twice Shy: What is Credit Security Worth to You?

Nora Dunn — Sat, 23 Aug 2008 01:16:25 +0000

Anybody who has had their identity stolen is usually willing to pay good money to ensure it never happens again. Weeks upon weeks upon months of tiresome paperwork, changing bank accounts, switching automatic payments, and in some cases pleading a case for wrongly damaged credit is among the giant task list of nightmarish to-dos when you’re picking up the pieces after the fact.

So what is it worth to you to try and avoid this problem altogether? Obviously, exercising due caution is easy enough to do and prudent to say the least. Don’t use a credit card or do banking over an unsecured wireless network. Be careful with your bank card and entering in PIN numbers in public places. Avoid using the same password for everything that also happens to be the name of your pet.

In this day and age, most of these techniques are relatively commonplace. But what else can you do?

Credit Reporting and Monitoring Services

Most credit agencies like Equifax, Experian, and TransUnion have a credit reporting service you can subscribe to. For between $10 and $15 per month for example, the Equifax Credit Watch program will alert you to any changes in your credit such as:

Somebody trying to open an account in your name
Credit inquiries made on your accounts
Changes in your account balance beyond user-set parameters
Even $20,000 in Identity Theft Insurance

Experian and TransUnion have similar programs here and here. Most programs encompass monitoring of all three credit bureau activities, but before you race out and sign up it would be prudent to double check. Paying a monthly fee for a service that monitors only one third of your credit history is, well, only one third as good.

Initially, it seems like a good deal, worth considering – especially for those who were once bitten and now twice shy.

But upon further consideration, I begin to question the value in the name of frugality.

Can I not hop online and check my credit balances daily (or every other day), scanning for erroneous charges?
If somebody does a credit check on me I’d like to know, but what if instead of subscribing, I periodically order a free credit report? Each of the three credit agencies usually allow one free report per year: if I timed it right I could check my credit activity every four months.
And although the Identity Theft insurance sounds handy, with a little bit of elbow grease, I shouldn’t have to pay any erroneous charges to my credit cards or account change fees once we’ve established the identity theft as the cause.

Then again…

There’s no denying the fact that simply paying the monthly fee could be easier, and may give you some more free time and well-deserved peace of mind.

Then again…

$10 here and $10 there, and you’ve blown your Latte Budget before even getting one drop of caffeine into your system.

So what is your credit security worth to you in this world of ever-increasing identity theft and credit crime? And what are you prepared to do about it?

This article is from Nora Dunn of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: