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Entries in Credit Score (8)

Tuesday
Feb192013

Low Credit Scores Could Mean Higher Insurance Rates

iStockphoto/Thinkstock(NEW YORK) -- Could your credit score have an impact on your insurance rates? Yes, according to insurance experts.

"Insurance companies discovered that people who have low credit scores actually end up having more insurance claims than people with high scores," explains Kim Lankford of Kiplinger's Personal Finance.  "They do charge people more if they have low scores."

So how can you make sure the facts on your credit report are accurate and that your score is correct?

"Go to annualcreditreport.com, check out your report, make sure there are no mistakes even if you're not about to take out a loan because it could have a big impact on your insurance rates," says Lankford.

Copyright 2013 ABC News Radio

Thursday
Jul212011

New Rule on Credit Score Disclosure Goes into Effect

Comstock/Thinkstock(WASHINGTON) -- Starting Thursday, lenders who deny a borrower credit or offer a higher-than-normal interest rate are required to show the borrower his credit score.

The new rule is part of an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act that passed exactly one year ago.  Introduced by Sen. Mark Udall, D-Colo., it requires creditors to provide additional information in adverse action notices if a credit score was used in making a credit decision.

Udall said the credit scores to which consumers previously had access were often not the same as those lenders used to gauge an applicant's creditworthiness.  Bad credit scores, of course, can mean higher interest rates, less-favorable loan terms, or outright rejection for a loan or a mortgage.

Now when lenders such as banks or credit card companies use credit scores to deny credit or offer an unusually high interest rate, they must disclose not only the relevant scores to the borrowers but also what influenced how their scores were arrived at, the range of possible scores under the model used, the date the score was created and the name of the entity or person that provided the score.

"Your credit score can skew the terms of your car loan or even prevent you from being approved for a home mortgage.  With such important financial decisions hanging in the balance, you ought to be able to see the score that is being used against you," Udall said.  "This law adds a level of protection for American consumers while giving them access to a crucial tool to make smart choices about their finances. "

Fair Isaac and Company, or FICO, the developer of the software that generates most of the credit scores used by U.S. lenders, estimates the new provision will result in more than 500 million credit score disclosures each year.  The new Consumer Financial Protection Bureau, which also officially launches Thursday, will enforce the rule with the Federal Trade Commission and other banking regulators.

But consumer advocates fear the law may not be strong enough nor the rules clear enough for consumers to get the information they need to secure a better loan later.

"The good news is consumers will get credit scores...when they apply and are rejected for credit," Ed Mierzwinski, director of the consumer program at the U.S. Public Interest Research Group, said.  "The disappointing news is you will also not get a complete notice explaining why you paid more."

Some lenders that use a proprietary scoring system may not be required to provide that score to the consumer, and some industries, such as car financing, may fall out of the purview of the new rule altogether.

Copyright 2011 ABC News Radio

Monday
Jul182011

New Law Gives Consumers New Access to Credit Scores

Comstock Images/Thinkstock(NEW YORK) -- Beginning this week, a new law will give consumers more information about their credit scores when they need it most -- while seeking to take out a loan.

Your credit score can make a huge difference when you apply for a loan, with better scores guaranteeing you cheaper rates on mortgages or car loans.

As John Ulzheimer of SmartCredit.com says, consumers have a right to know what their score is when borrowing money.  And now, thanks to the Fair Access to Credit Scores Act, consumers will be told what their scores are when they apply for several types of loans.

"We're talking about any loan that is underwritten with a credit score," Ulzheimer says.

"You're going to have consumers now who are going to see their actual legitimate score who've never seen it before and for some of them it's going to be the equivalent of shock therapy," he adds.

Why "shock therapy?" You need a score of at least 750 to get the best rates, and many consumers have no idea where they rank.

Copyright 2011 ABC News Radio

Monday
Jul112011

Consumers to Learn Credit Scores When Applying for Loans

Comstock Images/Thinkstock(NEW YORK) -- Do you know your credit score?  If not, you may soon learn what your personal number is thanks to a change in federal law.

As part of the Fair Access to Credit Scores Act, which goes into effect later this month, consumers will be told what their scores are when they apply for several types of loans.

"This is actually very good news for consumers," says John Ulzheimer of SmartCredit.com.

"The consumer is going to get a copy of the score in almost every single situation including if they are denied based on the score, if they are approved but with less advantageous terms," Ulzheimer says.

This includes interest rates on loans and "if they have the annual percentage rate on their credit card increased because of the credit score," he adds.

Copyright 2011 ABC News Radio

Monday
Apr042011

Ten Ways to Improve Your Credit Score Instantly

George Doyle/ThinkstockBy Elisabeth Leamy

(NEW YORK) -- I'm like the doctor who's always getting approached at cocktail parties by people who want free medical advice. Only my friends, family and co-workers are after consumer advice.

Actually, I don't mind a bit, because living vicariously through these queries helps keep me up to date on real issues that real consumers are facing.

Recently, a co-worker, who shall remain nameless, started pinging me about once a week with credit questions. Turns out he wants to buy a house and he's doing everything right, by taking a hard look at his credit well in advance of the purchase. That puts him in a position to raise his credit score so he can get the best possible interest rate when the time comes to take out a mortgage.

My co-worker was going round and round with a debt collector who was trying to collect an unpaid bill for one of those music subscription clubs, where you get a CD in the mail every month. Turns out, way back in college, one of his roommates had signed up in his name, then did not pay. No surprise, he couldn't get the collector to believe his story.

Fortunately, he doesn't really have to persuade the collector. What my co-worker was trying to accomplish was to get the unpaid debt removed from his credit reports. For that, you don't have to deal with the original merchant or their hired gun collector. All you have to do is dispute the item with the three major credit bureaus that keep credit reports on all of us: Equifax, Experian and TransUnion.

I advised my co-worker to approach the three bureaus and simply state that the music account was not his. No need to go into the whole story about the roommate, which might give them wiggle room to blame him for having bad roommates. The way I saw it, this was a fraudulent account, pure and simple. Identity theft. So what if he knew the guy?

It worked. Within hours of filing his dispute, one of the credit bureaus had removed the account from his report and we expect the others to follow suit.

Here's why that's such a victory; because your all-important credit score is calculated using the data in your three credit reports. Erroneous, unflattering information can drag down your score. Indeed, in my co-worker's case, when that one small black mark was removed, his score jumped up from 648 to 689.

So here's what you do. Go to the government-mandated website www.annualcreditreport.com to get your three free credit reports from the major bureaus. If there are inaccurate, unflattering entries on your report, simply fill out the form provided to dispute them.

Pay particular attention to the following kinds of errors, which can drag your score down most of all:

Old Bankruptcies
Bankruptcies remain on your report for 10 tough years. If a bankruptcy entry is still there after that, complain.

Debts Disposed of in Bankruptcy
If you declared bankruptcy in the past, debts covered by that bankruptcy settlement should not appear on your report as past due or still payable because bankruptcy wipes the slate clean.

Outdated Lawsuits and Judgments
If you paid a legal judgment, it should not be in your records anymore. If you didn't pay, it's still supposed to disappear after seven years.

Inaccurate Tax Liens
Tax liens you have paid remain on your report for seven years. Unpaid ones last 15 years, longer than anything else. (Guess who makes the laws.) If there's a lien on there longer than those two parameters, dispute it.

Outdated Demerits
Late payments and charge-offs, where creditors write your bill off because they have given up on you, are not allowed to remain on your report after seven years.

Duplicate Debts
The same debt should not be listed more than once, particularly by more than one debt collector.

Your Spouse's Bad Debts
If your spouse failed to pay bills before your marriage or after your official divorce, as long as your divorce filing was handled properly, these should not be on your credit report.

Other People's Accounts
Other people's account information -- good or bad -- should never appear on your credit statement. A cynic might say to keep the stranger's entries if they are positive, but who's to know when that person will face a financial crisis that will ruin their credit, and yours.

Old Credit Applications
"Hard" inquiries where you apply for credit count against you. They shouldn't remain on your report for more than two years.

Credit For Which You Didn't Apply

If you spot hard inquiries that you didn't authorize, dispute them. "Soft" inquiries, where banks check your credit report in order to offer you a preapproved card, are harmless. Checking your own report is harmless.

Copyright 2011 ABC News Radio

Thursday
Feb242011

Repairing Your Credit Score? Give Customer Service a Try 

Photo Courtesy - Getty Images(NEW YORK) -- Having a bad credit score can cost a small fortune. Loans cost more, you may fail to qualify for a mortgage and even landlords may charge tenants more rent.

If old late payments are putting a dent in your score, you may be able to persuade creditors to remove them from your credit history, according to Ken Linn of the personal finance site CreditKarma.com.

"If you're a good customer and you've really cured your delinquency in the past, you can call.  It's surprising what a phone call to customer service will do," Linn says.

Linn adds that if the company refuses, "You might want to try multiple times if you don't get a good result the first time."

Copyright 2011 ABC News Radio

Thursday
Nov252010

What You Should Know About Holiday Credit Card Deals

Photo Courtesy - Getty Images(NEW YORK) -- The biggest shopping day of the year is upon us and many consumers will be tempted to use credit cards that offer special holiday rewards.

Such targeted awards are being aggressively marketed this year, reports USA Today, offering big incentives for shoppers to use plastic over paper.

New Discover More card members, for example, can earn $100 for spending $500 in their first three months.  Chase Freedom offers the same incentive, only card holders must spend $800 to get the reward.

Although the payback is big, the interest rates are bigger and consumers who aren’t prepared to pay their balance off in full could let the temptation get them in trouble.

If balances are paid off, however, the big rewards may be worth it.  Some tips for smart swiping?

Make sure the reward will benefit your spending habits.  Don’t be lured in by a flashy incentive you won’t use.

Be aware of enrollment requirement as some card issuers bank on the fact that card holders will forget to enroll for lucrative “rotating” offers.

Finally, make sure the rewards fit your budget and you are not being required to spend more than you expected to during the holidays just to earn a bit extra.

Copyright 2010 ABC News Radio

Saturday
Oct302010

Feds Combat Online Credit Scams

Photo Courtesy - Getty Images(SAN FRANCISCO) -- Regulators are cracking down on some firms that promise to fix your credit problems.

"The way that debt settlement companies bill consumers has now changed," said John Ulzheimer of Credit.com.

Before these new rules, Ulzheimer said, "the debt settlement companies could have charged consumers an upfront fee for their services whether they actually did anything for the consumer or not,” a practice that is now illegal.

The change means some operators could be forced out of business.

“Many of these companies did nothing more than survive on upfront fees,” said Ulzheimer, who added that the true practice of fixing incorrect credit reports takes time and effort.

Copyright 2010 ABC News Radio







ABC News Radio